Mark Thoma recently linked to an interesting piece discussing why some countries have higher social mobility than others.
As I’ve written before, I think that people are wrong to focus on relative wealth (aka inequality) than absolute wealth (aka improved standards of living). However, the element of social mobility is relevant, as it signals in a sense how much income is decided by factors like hard work and how much income is decided by factors like personal connections, having a large trust fund, etc.
The United States, perhaps unsurprisingly, is grouped with countries like the United Kingdom, France, and Italy as places with relatively low class mobility compared to countries like Denmark, Norway, and Canada.
But before we write off capitalism and trump huge Scandinavian welfare states, we need to look more into the study. Causa and Johansson, the authors of one study mentioned, found:
Across European OECD countries covered by the analysis there is a substantial wage premium associated with growing up in a higher-educated family, whereas there is a penalty with growing up in a less-educated family, even after controlling for a number of individual characteristics.
I am willing to accept that the horrible state of education – especially in lower-income parts – in America plays a large part in decreased social mobility. But it’s not for lack of effort. The United States does not lag these countries in education spending. In fact, America spends a tremendously larger amount, both in absolute terms and per GDP per capita, than the countries that have higher social mobility.
Some other findings also conclude that egalitarian governmental programs do indeed increase social mobility. Check out the post here.