Meritocracy and inherited advantage in the United States

We use a model to interpret US regional data on income, inequality, and intergenerational mobility, to produce indices of ‘meritocracy’ and ‘advantage’: high meritocracy implies local labour markets accurately reward actual human capital; high advantage implies local labour markets reward class background. The paper then characterises how these derived indices correlate with observable characteristics of regions. We find some intuitive results which correlate with the common understanding of these terms: more meritocratic regions tend to be urban areas with better educational and labor market opportunities, while regions with higher levels of inherited advantage are often marked by more racial segregation, single-parent households, crime, and stagnant economic conditions. There are also some interesting and subtle deviations from such an everyday understanding, such as more meritocratic regions being more unequal with lower social mobility. Finally, we show that there is information content in the model itself: our indices - derived from data on income, inequality, and intergenerational mobility - provide extra explanatory power for voting behaviour in the USA, over and above the data on income, inequality, and intergenerational mobility. We conclude that using our model to interpret the data at the regional level, reveals new insights into regional characteristics.