The Challenge Of Improving Economic Mobility

It is a persistent question that is asked by economists and public policy officials – how can a society give sufficient opportunities to its most disadvantaged so that they may break through economic barriers and rise up the income ladder? This problem is a central point of reference for those individuals and groups who develop responses to issues such as poverty, inequality, and economic growth.

The benefits of economic mobility for a society are profound. It increases economic growth and reduces poverty. This can, in turn, facilitate greater social cohesion and stability, as individuals are confident about their capacity to be resilient and achieve the full extent of their potential.

The new report entitled “Fair Progress? Economic Mobility across Generations Around the World” by the World Bank stipulates that economic mobility has been hampered in recent years as people struggle to move beyond the confines of their parents’ socioeconomic status. The concern is particularly pertinent for developing economies, which comprise 92% of the bottom 50 economies in terms of mobility. Africa and South Asia have the lowest economic mobility, where roughly 12% of adults have been able to obtain more education than their parents. It is necessary to acknowledge that a lack of jobs is the key reason behind why there is a substantial gap between high educational mobility and low income mobility in developing countries.

The report assessed this data using its Global Database for Intergenerational Mobility (GDIM). It divided economic mobility into two categories: absolute mobility, which measures how people have been able to exceed their parents’ living or educational standards, and relative mobility, which measures the extent to which people have been able to achieve overall independence in an economic scale when compared to the previous position of their parents.

The World Bank report also outlined some other key findings. First, the likelihood of individuals to be able to move up the economic ladder is low among poor families. In low and low-middle income countries, there is a negative correlation between households with low parental education and children gaining access to enrollment at school. Second, African and South Asian students who have been born in the 1990’s or later have an increased likelihood of obtaining higher education when compared to their parents. Third, the progress of women in education is expected to outpace boys across the developing world relatively soon – this outcome has already been reached in the developed world. However, it is appropriate to point out that women still have lower employment and wage levels than men.

The report contends that a broader issue that must be examined is how public policy can be used to shape appropriate financing and prudent spending on programs that lift mobility. Public spending in health and education is essential, which must meet quality standards. Any such investment should focus on childhood development and access to quality schooling, particularly in relation to primary school. In terms of the labour market, the report concluded that young people and vulnerable groups should be given opportunities to access the labour market, market competitiveness should be improved, and legislative reform should seek to reduce barriers in relation to employment in terms of race and gender. A progressive and equitable tax system can be used to finance these endeavours, although structural reform that facilitates market openness can also help to inject necessary investments into the economy, which in turn may spur more jobs.

However, positive long-term change in relation to economic mobility cannot occur unless it comes from the grassroots – that is how local communities can sustain structures that equalize opportunities and improve net social benefits. The key stakeholders to drive this endeavour in this sense are local governments, families, schools, and local communities. Ultimately, all human beings have different talents, but societies must be continually reminded that it is their collective responsibility to make sure that every person has an opportunity to develop such talents without being subject to impediments as a result of their background.

Michael Murdocca