1. The height of each bar measures the extent to which sons’ earnings levels reflect those of their fathers. The estimates are the best point estimate of the intergenerational earnings elasticity resulting from an extensive meta-analysis carried out by Corak (2006) and supplemented with additional countries from d’Addio (2007). The choice of empirical estimates in this meta-analysis is motivated by the fact that they are based on studies that are similar in their estimation technique, sample and variable definitions. The higher the value, the greater is the persistence of earnings across generations, thus the lower is the intergenerational earnings mobility. Source: D’Addio (2007).

Going for Growth 2010: It is easier to climb the social ladder and earn more than one’s parents in the Nordic countries, Australia and Canada than in France, Italy, Britain and the United States, according to a new OECD study. Intergenerational Social Mobility: a family affair? says weak social mobility can signal a lack of equal opportunities, constrain productivity and curb economic growth.

The Paris-based think-tank for 31 mainly rich countries including Ireland, says climbing the social ladder depends on a range of factors such as individual ability,  family and social environments, networks and attitudes. But public action – particularly education and to some extent tax policies - can play an key role in helping people achieve a higher income and social status than their parents. Across all countries  family and socio-economic background is a major influence on a person’s level of education and earnings, but the impact of  parental education, or lack of it, on a child’s future prospects is particularly marked in southern European countries and the UK.

The study finds that in these countries people whose fathers have a university degree earn on average at least 20% more than children of men whose education ended at upper- secondary level, and well over a third more than children of men who had not reached upper-secondary education. Well educated parents tend to have well educated children for whom it is easier to obtain well paid jobs. But the odds are stacked against children who do not benefit from this virtuous cycle.

Encouraging greater social mix in the classroom is one of the ways government policy can help children from disadvantaged backgrounds improve their prospects, according to the study. Also important is  providing quality education to the very young which improves the chances of academic success as the child moves up through the school system.

Segregating pupils too early on the basis of academic abilty is  found to undermine social mobility. By delaying selection until the age of 16 instead of 10 as is currently the case in some countries, the influence  of the school socio-economic environment on pupils’ academic performance could be reduced by as much as two-thirds.

The study also finds that social mobility between generations tends to be lower in more unequal societies. It says redistributive tax and benefit policies aimed at providing income support or access to education for disadvantaged families may reduce the handicaps of a poorer or less well educated background. However, any growth-enhancing impact of redistributive policies via increased social mobility would need to be weighed against other, well-established negative effects on growth via reduced labour utilisation.

Intergenerational Social Mobility: a family affair? will be published as a chapter in the OECD’s “Going for Growth” report on 10 March 2010. Going for Growth is an annual publication which looks at the progress countries are a making towards structural reforms aimed at enhancing long-term economic dynamism.

Other special topics in the forthcoming edition include reforms in the large emerging economies and financial market regulation. Going for Growth 2010 also assesses the measures taken by OECD countries in a broad range of structural policy areas in the context of the crisis, and makes specific recommendations to strengthen the ongoing recovery and consolidate public finances while protecting long-term growth.

Read Chapter 5: Intergenerational Social Mobility: a family affair?