Scandinavia the place to go for social mobility

A HT to colleague David Parr for this article from the World Economic Forum site. Richard Wilkinson and Kate Pickett’s book ‘The Spirit Level’ (2009 – although a bit old it does make for interesting reading) goes about providing evidence that almost everything – from life expectancy, social mobility, violence – is affected not by how wealthy society is, but how equal it is.

Income Inequality and Social Mobility

Chapter 12 in the book addresses the link between high levels of income inequality and low levels of social mobility – see graph below. The graph below shows that countries with bigger income differences tend to have much lower social mobility. In the USA there is a lack of social mobility compared to other nations as well as there being high income inequality. The opposite applies to the Scandinavian countries where Norway, Sweden, Finland and especially Denmark have low income inequality but very high social mobility. The authors do alert the reader to be cautious as there is no data that allow to estimate social mobility for each state and test the relationship with inequality independently in the USA. But other variables such as public spending on education, changes in geographical segregation lend plausibility to the graph below.

Research from the The State of Working America 2006/7 report shows the power of the father’s income to determine the income of their sons. The lower percentage indicates that a fathers’ incomes are less predictive of sons’ incomes – therefore more mobility. A high percentage indicates that rich fathers are more likely to have rich sons and poor fathers to have poor sons – therefore less social mobility. The figures below show the declining social mobility.

1980 – 11% of sons’ income explained by fathers’ income.
2000 – 34% of son’s income explained by fathers’ income.

Social Mobility and Education

Education is generally seen as one of the vehicles for increasing social mobility. Wilkinson and Pickett found that public expenditure on school education is strongly linked to the degree of income equality.

Norway – 97.8% of money spent on school education is part of public expenditure
USA – 68.2% of money spent on school education is part of public expenditure

This is likely to have a substantial impact on social differences in access to higher education.

Some points from the World Economic Forum video:

  • America now has lower social mobility than Denmark, France and Germany.
  • In unequal societies, young people from poor families are more likely to drop out of school
  • More parents struggle with mental health problems, long working hours and debt
  • Income inequality in the USA is 0.39 (1 is complete inequality – 1 person owns all the income of the country) Denmark is 0.25

What does Denmark do?

  • University education is free and childcare is well funded
  • The biggest boost to social mobility is wealth distribution. The Personal Income Tax Rate in Denmark stands at 55.8%. It averaged 60.66 percent from 1995 until 2017.

Across the West rising inequality hampers innovation and entrepreneurship. A study of 21 countries showed that as inequality rose the number of patents fell. Reducing inequality is one of 17 of the United Nations Sustainable Development Goals. Below is an interesting TED Talk by Richard Wilkinson.

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