How to Promote Social Mobility

A Broken Social Elevator?

Céline THEVENOT, OECDJobs and Incomes Division

Source: OECD Income Distribution Database (www.oecd.org/social/income-distribution-database.htm)Note: the Gini coefficient ranges from 0 (perfect equality) to 1 (perfect inequality). Income refers to cash disposable income adjusted for household size. Data refer to 2015 or latest year available.

Large country differences in

levels of income inequality

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Emerging economies

0.2

0.25

0.3

0.35

0.4

0.45

0.5Gini Coefficient of income inequality

OECD countries

Mo

re i

ne

qu

ali

ty

Income inequality has been

rising

Source: OECD Income Distribution Database, www.oecd.org/social/income-distribution-database.htm. Note: Income refers to real household disposable income. OECD-17 refers to the unweighted average of the 17 OECD countries for which data are available: Canada, Denmark, Finland, France, Germany, Greece, Israel, Italy, Japan, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Sweden, the United Kingdom and the United States. Some data points have been interpolated or use the value from the closest available year.

Trends in real household incomes1985 = 1 OECD-17

0.8

1

1.2

1.4

1.6

1.8

1980 1985 1990 1995 2000 2005 2010 2015

Top 10%

Mean

Median

Bottom 10%

Consequences of inequality

ethical social

economicpolitical

Inequality and growth : links

over three decades

1. Higher income inequality lowers subsequent economic growth in the long-term

� Increasing income inequality by 1 Gini point lowers the growth rate of GDP per capita by ~0.12 %-points per year

2. This is driven by disparities at the lower end of the distribution, incl. lower middle classes, not just the poor

3. Redistribution through taxes and transfers does not

necessarily lead to bad growth outcomes

Higher inequality hinders skills

investment by the lower middle class and

lowers social mobility

Note: Low PEB: neither parent has attained upper secondary education; Medium PEB: at least one parent has attained secondary and post-secondary, non-tertiary education; High PEB: at least one parent has attained tertiary education. The bars indicate 95% confidence intervals.

Average years of schooling

by parental educational background (PEB) and

inequality

11

12

13

14

20 25 30 35

Ye

ars

of

sch

oo

lin

g

Inequality (Gini coefficient)

Low PEB Medium PEB High PEB

Increasing inequality by ~5-6 Gini pts. (the current differential between Denmark and

Germany) means less average schooling of low PEB individuals by ~half a year

Source: OECD (2015), “In It Together”

Average numeracy score

by parental educational background (PEB) and

inequality

240

250

260

270

280

290

300

20 25 30 35

Nu

me

racy

Sco

re

Inequality (Gini coefficient)

Low PEB Medium PEB High PEB

Sticky floors and sticky

ceilings in education

7

43

31

45

41

10

22

2

0 10 20 30 40 50 60 70 80 90 100

At least one parent has attained tertiary

Neither parent has attained upper secondary

%

Likelihood of educational attainment by parental

education background, OECD average

Lower secondary or less Upper secondary & post-secondary, non-tertiary

Tertiary - bachelor and professional degree Tertiary - Master/Research degree

0

10

20

30

40

50

60%

Father in the bottom earnings quartile

Father in the top earnings quartile

Sticky floors at the bottom,

sticky ceilings at the top

Children from disadvantaged families struggle to move up the ladder

Share of people in the top earnings quartile, by father’s earnings position

It would take 5 generations for the

descendants of a low-income

family to reach the average income

Number of generations it would take for descendants of families in the bottom 10% to reach the mean income in society

0

2

4

6

8

10

12

0

2

4

6

8

10

12

10

More inequality does not

mean more social mobility

OECD24

DNK

NOR

FIN

SWE ESPNZL

GRC

CAN

BEL

AUS

JPN

PRTNLDIRL

KOR USAITA

GBRCHEAUT

FRA CHL

DEU

HUN

ARG

INDCHN

BRAZAF

COL

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

0.1 0.2 0.3 0.4 0.5 0.6 0.7

Earnings mobility across generations today

Inequality 25 years ago (Gini coefficient)

Mo

re m

ob

ilit

y

More inequality

Mobility patterns across generations,

by country and dimension

United States Germany

Sweden

DenmarkHungary OECD

United States

Earnings mobility

Occupation mobillityIcelandKorea OECD

United States

Education mobilityKoreaPortugal OECD

United States

Minimum Maximum

Iceland Mex icoOECD

United States

Income inequality

DenmarkHungary OECD

Sweden

Earnings mobility

Occupation mobillityIcelandKorea OECD

Sweden

Education mobilityKoreaPortugal OECD

Sweden

Minimum Maximum

Iceland Mex icoOECD

Sweden

Income inequality

DenmarkHungary OECD

Germany

Earnings mobility

Occupation mobillityIcelandKorea OECD

Germany

Education mobilityKoreaPortugal OECD

Germany

Minimum Maximum

Iceland Mex icoOECD

Germany

Income inequality

Italy

Many people perceive social

mobility to be low

Source: OECD calculations based on the International Social Survey Program (ISSP)

Share of people who believe it is (not) important to have well-educated parents to get ahead in life

0

10

20

30

40

50

60

70

0

10

20

30

40

50

60

70

Important Not important

Perceptions about mobility

tend to square with reality

Note: Perceived persistence corresponds to the share of people who believe that it is important to have well-educated parents to get ahead. Earnings persistence corresponds to the elastisticy of earnings between fathers and sons. The higher the elasticity, the lower is intergenerational mobility. Perception data refer to 2009. Earnings persistence data refer to earnings of sons in the early 2010s with regard to fathers’ earnings. Source: OECD calculations based on the International Social Survey Program (ISSP) and Chapter 4 of “Broken Social Elevator”

Perceived and actual persistence of earnings over one generation

AUS

AUTBEL

CHE

CHL

DEU

DNK

ESP

FIN

FRA

GBR

HUNITA

JPN

KOR

NOR

PRT

SWE

USA

OECD

ZAF

0

10

20

30

40

50

60

70

80

0 10 20 30 40 50 60 70 80

Perceived persistence

Earnings persistence

Mobility over the life course

3257

68

43

0

10

20

30

40

50

60

70

80

90

100

Poorest 2 3 4 Richest

%

Move one quintile or more up

Stay in the same quintile

Move one quintile or more down

Mobility over the life course

Most people at the top and bottom do not change their position in the income distribution over a 4-year period

Share of individuals moving up, moving down, or staying in the same income

quintile, disposable income, 4 years, early 2010s or latest

Risk for middle income households to slide down to the bottom, 4 years, 2010-2014 or closest

1 in 7 middle class individual

likely to fall down within 4 years

0 2 4 6 8 10 12 14 16 18 20

LuxembourgRépublique slovaque

CoréePays-BasLettonie

SuèdeEstonie

NorvègeAllemagne

FinlandeDanemark

TurquieSuisse

République tchèqueÉtats-Unis

IrlandeItalie

FranceSlovéniePolognePortugalHongrie

BelgiqueAustralie

Royaume-UniAutricheEspagne

ChiliIslande

Grèce

OCDE34

Consequences of downward

mobility over the life course

0

10

20

30

40

50

60

70

80

90

100

%

Economic situation improved (↗) Economic situation got worse Economic situation stayed about the same

People with a deteriorating economic situation over the past 5 years are less likely to feel that their voice counts at country level

Note: Control variables include age, household composition, overall feeling about life, political interest index.

Source: OECD calculations based on Eurobarometer 86, Nov. 2014.

Large market income losses are smoothed

to a different extent

0

5

10

15

20

25

30

35

Share of people with large income losses

Loss of 20% or more of market income (↘) Loss of 20% or more of disposable income

Public policies can make

societies more mobile

Countries that in the past spent more on public education tend to have higher educational mobility

Countries that devoted more resources to health tend to have higher health mobility

SVN

DNK

CZE

BEL

AUT

SWE

LUX

HUN

DEUPOL

FRA

KORIRL

NLD

CAN

ITA

EST

PRT

AUS

GRC

ESP

ISRGBR USA

OECD26

0.6

0.7

0.8

0.9

1

0 20 40 60 80 100

Health status mobility

Health resources 2005

BEL

CZE

DNKFIN

FRA

DEU

HUN

IRL

NOR

PRT

SVK ESP

SWE

GBR

USA

OECD15

0.3

0.4

0.5

0.6

0.7

0.8

3 3.5 4 4.5 5 5.5 6 6.5 7 7.5Public expenditure on education as a percentage of the GDP

in 1995

Intergeneration

al educational

mobility

Policies can make our

societies more mobile

What the OECD offers

Contactceline.thevenot@oecd.org

http://oe.cd/social-mobility-2018

@OECD_Social

http://oe.cd/cope

Thank you for your attention

• Mobility of educational attainments between mothers and daughters tends to be lower than the mobility between fathers and sons, in particular in southern Europe and the emerging economies.

• Occupational mobility is also lower for women than for men, meaning that parents influence their daughters’ social positions more than their sons’.

• At the same time, intergenerational earnings mobility for daughters tends to be more similar to that for sons, especially when considering incomes rather than individual earnings.

Men and women have different prospects for social mobility