How mobile is our society? How easy is it to go from rags to riches? An integral part of the American Dream is that American society has high degrees of social mobility. Pew's Economic Mobility Project has been studying social mobility in the United States. In a recent report, they looked at the characteristics of those who are socially mobile (and note even these are the minority as most people are not socially mobile). In the United States, the upwardly mobile are more likely to be white, married and have a college degree. Wall Street Journal coverage of this research is here.
Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak and Todd Mitton have written a paper on whether firms connected to Timothy Geithner benefited from these connections. They do so by looking at how stocks of these firms reacted to the announcement that he was a nominee for Treasury Secretary in November 2008. They find that there were large abnormal returns for connected firms. Below is the paper's abstract and the full paper is available here . The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small ne...