A Broken Social Elevator?

How to Promote Social Mobility

Céline THEVENOT, OECD

Jobs and Incomes Division
 Large country differences in
levels of income inequality

OECD countries Emerging economies

0.5 0.7
Gini Coefficient of income
inequality

0.6
0.45
More inequality

0.5
0.4

0.4

0.35

0.3

0.3
0.2

0.25
0.1

0.2 0

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.
 Income inequality has been
rising

Trends in real household incomes

1985 = 1 OECD-17

1.8

Top 10%
1.6
Mean

1.4
Median

Bottom 10%
1.2

0.8
1980 1985 1990 1995 2000 2005 2010 2015
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.
Consequences of inequality

ethical social

political economic
 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
Average years of schooling Average numeracy score
by parental educational background (PEB) and by parental educational background (PEB) and
inequality inequality
Low PEB Medium PEB High PEB Low PEB Medium PEB High PEB
14 300

290
Years of schooling

Numeracy Score
13 280

270

12 260

250

11 240
20OECD (2015),
Source: 25 30 35 20 25 30 35
“In It Together” Inequality (Gini coefficient) Inequality (Gini coefficient)

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
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.
 Sticky floors and sticky
ceilings in education

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

Neither parent has attained

43 45 10 2
upper secondary

At least one parent

7 31 41 22
has attained tertiary

% 0 10 20 30 40 50 60 70 80 90 100
 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

60 %
Father in the top earnings quartile
50

40

30

20

10
Father in the bottom earnings quartile
0
 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

12 12

10 10

8 8

6 6

4 4

2 2

0 0
 More inequality does not
mean more social mobility

Earnings mobility across generations today

0.9
DNK
NOR
FIN
0.8 OECD24

SWE NZL ESP

GRC
0.7 CAN
AUS
BEL JPN
NLD PRT
0.6 KOR
IRL USA
ITA
GBR
AUT CHE
More mobility

0.5 ARG
FRA CHL
DEU CHN IND

0.4
HUN

BRA
ZAF
0.3
COL

0.2
0.1 0.2 0.3 0.4 0.5 0.6 0.7

Inequality 25 years ago (Gini coefficient)

More inequality 10
 Mobility patterns across generations,
by country and dimension

United States Germany

Minimum Maximum
Minimum Maximum Iceland OECD Mex ico
Iceland OECD Mex ico Income inequality
Income inequality Germany
United States Hungary OECD Denmark
Hungary OECD Denmark Earnings mobility
Earnings mobility Germany
United States Portugal OECD Korea
Portugal OECD Korea Education mobility
Education mobility Germany
United States Korea OECD Iceland
Korea OECD Iceland
Occupation mobillity
Occupation mobillity Germany
United States

Italy
Sweden
Minimum Maximum
Iceland OECD Mex ico
Income inequality
Sweden
Hungary OECD Denmark
Earnings mobility
Sweden
Portugal OECD Korea
Education mobility
Sweden
Korea OECD Iceland
Occupation mobillity
Sweden
 Many people perceive social
mobility to be low

Share of people who believe it is (not) important

to have well-educated parents to get ahead in life

Important Not important

70 70

60 60

50 50

40 40

30 30

20 20

10 10

0 0

Source: OECD calculations based on the International Social Survey Program (ISSP)
 Perceptions about mobility
tend to square with reality

Perceived and actual persistence of earnings

over one generation
Perceived persistence
80
ZAF
70

60 CHL
ESP
USA DEU
50
AUS KOR
40 BEL PRT FRA HUN
ITA AUT
30 OECD CHE
GBR
DNK SWE JPN
20 NOR

FIN
10

0
0 10 20 30 40 50 60 70 80
Earnings persistence

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”
Mobility over the life course
 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

100
90
80 43 Move one quintile or more up
70
68
60
50
Stay in the same quintile
40
30 57 32
20
Move one quintile or more down
10
0
Poorest 2 3 4 Richest
 1 in 7 middle class individual
likely to fall down within 4 years

Risk for middle income households to slide down to the

bottom, 4 years, 2010-2014 or closest
OCDE34
Grèce
Islande
Chili
Espagne
Autriche
Royaume-Uni
Australie
Belgique
Hongrie
Portugal
Pologne
Slovénie
France
Italie
Irlande
États-Unis
République tchèque
Suisse
Turquie
Danemark
Finlande
Allemagne
Norvège
Estonie
Suède
Lettonie
Pays-Bas
Corée
République slovaque
Luxembourg
0 2 4 6 8 10 12 14 16 18 20
 Consequences of downward
mobility over the life course

People with a deteriorating economic situation over the past 5 years

are less likely to feel that their voice counts at country level

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

%
100
90
80
70
60
50
40
30
20
10
0

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

Share of people with large income losses

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

35

30

25

20

15

10

0
 Public policies can make
societies more mobile

Countries that in the past spent Countries that devoted more

more on public education tend to resources to health tend to have
have higher educational mobility higher health mobility

Intergeneration
al educational Health status
mobility mobility

0.8 1

SWE CAN
0.7 NOR FIN DNK
DNK 0.9
FRAUSA GRC
HUN BEL NLD SWE
IRL
0.6 OECD15 ESP ITA FRA
PRT OECD26
BEL SVN AUT
0.8
SVK ESP GBR HUN POL
0.5 CZE AUS DEU
CZE
GBR USA
ISR IRL
0.7 KOR
0.4 DEU LUX
EST
PRT

0.3
0.6
3 3.5 4 4.5 5 5.5 6 6.5 7 7.5
Public expenditure on education as a percentage of the GDP 0 20 40 60 80 100
in 1995 Health resources 2005
 Policies can make our
societies more mobile

What the OECD offers

Thank you for your attention

Contact
[email protected]

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

@OECD_Social

http://oe.cd/cope
 Men and women have
different prospects for social
mobility

• 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.