The rise of inequality has shaped economic research in recent decades. Over the last 25 years, the average disposable income of the top 10% of earners in OECD countries has increased from seven to ten times more than that of the lowest 10%. Income and wealth gaps between citizens continue to grow starker despite absolute poverty reduction. The widening divisions between social, racial, and ethic groups have lasting effects on education, employment opportunities, quality of life, and health outcomes. The multi-dimensional nature of inequality and the importance of considering relative mobility within countries has led to a gamut of findings that reiterate the importance of creating an equitable environment and implementing fair policies that reduce the challenges of social mobility. A tangible initiative generated from these conclusions is focused on challenging traditional social assistance models and implementing modern labor development programs to enable a changing and aging workforce to remain relevant.
Social mobility can be viewed as a collection of escalators. If you and your peers each stood on your own parallel escalators you might ask- how fast are my steps moving relative to the friends around me? This is known as intra-generational mobility, or the rate of personal perspectives given all members of society. This can be thought of as movement that is observed within short periods of time. The ability to move from a low-paying to middle-paying job over the span of several years would showcase a certain rate of intra-generational mobility. You might also be curious on whether your escalator moves faster or slower than the one that your parents used. This is inter-generational mobility; also known as the opportunities that are attainable over several lifespans. The most common metric for this is whether people earn more than their parents. Both rates of social mobility are not evenly distributed within OECD populations and call for well-designed strategies that act as mechanisms to recalibrate the speed of the escalators. Active labor market interventions provide one method to mitigate income shocks and decrease inequality.
Labor segmentation is a key component of modern immobility. Temporary jobs are becoming more frequent and could discourage firms from investing in stable occupations over a long period of time. The introduction of modern machines and the inception of the gig economy have led many middle-income workers to be replaced by these cheaper alternatives. An important component that must accompany these changing structures is legislation that protects workers across all spectrums of contractual work. Very few countries have addressed this new challenge in the labor market, and it should be seen as a top priority to future policies.
The second group of interventions that can help improve social mobility are programs that center around lifelong learning objectives. The rapidly changing global market requires the ability to adapt and repurpose skills. This labor market requirements often reinforce disparities for those with less access to training and education. To combat this, France and the United Kingdom have created unique initiatives. Recently, the French government introduced funding that enables working-age individuals to attend training, independent of their labor market status. The United Kingdom organized programs that focus on introducing low-skilled workers to activities that are identified as important for their career. Recognizing the need for continual learning enables people to capitalize on their full potential while simultaneously reducing the frictions of mobility.
Addressing the rapidly evolving labor market and acknowledging the inherent inequity with our societies are paramount to creating a more equal future. Possessing the security to adapt to new environments and having access to lifelong education are two major tenets that ensure labor markets act as equalizers rather than exacerbators. This knowledge is drawn from economic research that reiterates the imbalances with our society while also highlighting initiatives that have recently been implemented in major OECD countries. We can use these ideas as a starting point to build a future in which we are all riding the same escalator.
- OECD. (2018). A Broken Social Elevator? How to Promote Social Mobility. OECD Publishing. https://doi.org/10.1787/9789264301085-en
- Piton, Céline; Rycx, François (2020). A Broken Social Elevator? Employment Outcomes of First- and Second-generation Immigrants in Belgium. GLO Discussion Paper, No. 485. Global Labor Organization (GLO). https://www.econstor.eu/handle/10419/214654