Once upon a time, children were empathetic...

...but then they stopped reading fiction.  In our culture of testing, something that the general public might not know is that on a standardized test such as the ACT, the reading portion contains only non-fiction passages.  Why am I telling you about standardized test reading sections?  Because this has led to many schools focusing on the teaching of non-fiction almost exclusively, rather than exposing students to all types of writing and reading.  In Maryann Wolf's book, Proust and the Squid,  Wolf speaks to the importance of reading when it comes to developing a sense of empathy:

"This period of childhood [3.5-5 years old] provides the foundation for one of the most important social, emotional, and cognitive skills a human being can learn: the ability to take on someone else's perspective...Through stories in books we can learn what it feels like. In this process we step outside ourselves for ever-lengthening moments and begin to understand the 'other,' which Marcel Proust wrote lies at the heart of communication through written language" (Wolf, pages 85-86.)

So, if young people don't read both real and not-so-real stories from an early age, they are less able to empathize with their peers, their elders, people who they see on TV that live thousands of miles away.  I find this to be a fascinating idea.  I know that I personally love to read fiction because it allows me to see in to other people's world's (both real and imagined,) but I certainly never thought that it might actually be helping my moral character.

I found a number of articles and other blogs that have compiled serious scientific studies, and some more casual experiments that seem to prove this.  Here are the links, with my annotations in parentheses.  This is certainly not exhaustive, a simple google search for "empathy deficit teens fiction" yields too many articles to list here!

http://www.guardian.co.uk/books/2011/sep/07/reading-fiction-empathy-study (very recent experiment that used excerpts of JK Rowling and Stephenie Meyer novels, short read from a UK newspaper.)

http://cogscilibrarian.blogspot.com/2008/07/reading-fiction-improves-empathy.html (Cognitive Science Librarian's blog, with a good overview that speaks to how reading fiction improves empathy, she also has a brief bibliography that would be great to help with further reading on the subject.)

http://www.scientificamerican.com/article.cfm?id=what-me-care (focuses on empathy deficit in teens and where in comes from.)