Understanding how to promote social mobility and equal opportunity remains an important priority for governments and citizens. The OECD has helped inform policy debates and support member-countries’ efforts in these areas by providing them with a strong empirical basis and by enabling meaningful international comparison and peer learning. The influential 2018 report A Broken Social Elevator? notably documented the different patterns in social mobility across countries, the specific challenges they face as well as possible means to address them. By developing a robust and comparable measure of how opportunities are distributed across the population, this new report constitutes an important new step for this work and a valuable complement to existing measures of social mobility. It provides policymakers with:
Deeper insights into the role that inherited circumstances and other factors beyond an individual’s control play in shaping economic outcomes. This in turn can help improve policies for promoting social mobility through a better identification of the barriers people encounter and the type of support they need to realise the opportunities available to them.
Data and evidence that align more closely with the way in which people evaluate the fairness of socio-economic outcomes. This in turn sheds light on the extent to which disparities in outcomes are perceived to be justified or not in different national contexts, as well as the need for policies to address these disparities and ensure a more level playing field.
For the OECD, advancing the measurement and research agenda serves a practical and policy-oriented purpose. A richer “three-dimensional” picture of the state of inequality covering outcomes, social mobility and opportunities can better reflect the specificities of national contexts, institutions and histories. This can pave the way for more effective and tailored policies to reduce inequality, promote social mobility, ensure more equal opportunities for all and help address possible trade-offs between these different dimensions.
This report extends previous OECD work in two areas that are of high relevance to policy:
First, it uses an innovative approach to develop a measure of inequality of opportunity. Chapter 1 explains why and how this measure should be designed. Chapter 2 applies the measure to a large subset of OECD countries for which comparable data are available. It analyses the levels and trends in inequality of opportunity across countries, as well as the relative importance of different circumstances in shaping economic outcomes and their impact on different population groups, with a focus on generational and gender differences.
The approach taken is solidly grounded both in conceptual and methodological terms. It draws on recent advances in machine-learning techniques and on the theory of “luck egalitarianism” which has been used by the economic literature to operationalise the concept of equal opportunity. Luck egalitarianism views equal opportunity as the central component of economic fairness and seeks to balance distributive justice with considerations of individual responsibility and merit. In this perspective, a key role for policy consists in ensuring a more level playing field by correcting or compensating for inequalities that derive from circumstances that are beyond an individual’s control.
The measure developed presents several advantages: (i) it offers a lower-bound estimate of actual levels of inequality of opportunity that is robust and comparable across countries; (ii) it covers a wider set of circumstances than traditional approaches and takes account of their joint effect on economic outcomes; and (iii) it can be adapted to reflect the specific conditions of different population groups.
Second, the report provides a more detailed focus on the important links between opportunities and “place”. Drawing on recent OECD research, Chapter 3 documents and analyses geographic disparities in access to key drivers of social mobility including education, employment and essential services.
The analysis conducted in the report sheds light on several important questions:
What share of inequality in outcomes is attributable to inequality of opportunity?: On average across OECD countries, over a quarter at least of total inequality in market income can be attributed to inherited circumstances including gender, place of birth and parental socio-economic background. The extent to which inherited circumstances shape outcomes varies significantly, ranging from less than 15% in some countries to over 35% in others (see Figure 2.1). Recent patterns in inequality of opportunity show a slight increase on average as well as a degree of convergence, with levels tending to rise in countries where inequality of opportunity is low and to fall in countries where it is high (see Figure 2.4). The comparison between trends in income inequality and in inequality of opportunity suggests that, over the past 15 years, policies may have been more effective in reducing disparities in outcomes than in addressing long-term barriers to equal opportunity, with implied risks for future social mobility and economic growth (see Figure 2.5).
What are the main drivers of inequality of opportunity?: Parental socio-economic background continues to play a key role in shaping life chances. In a majority of countries, it contributes to over 60% of inequality of opportunity observed at household level and in some cases over 75% (see Figure 2.10). However, it is not the only significant factor and its relative importance varies across countries, as well as the aspect of parental background that matters most.
How are different populations affected and what are the barriers they encounter?: Even in countries where overall levels of inequality of opportunity are low, significant disparities can still be observed between groups. For example, gender differences in opportunities remain limited when measured in terms of household market income, as resource pooling and sharing within the household partly offset individual disparities in outcomes. However, the effects of gender become much more pronounced when inequality of opportunity is measured in terms of individual earnings rather than at the household level (see Figure 2.14). Similarly, for differences between cohorts, in a large majority of OECD countries younger generations have tended to experience higher levels of inequality of opportunity than previous generations at the same age (see Figure 2.12).
What role do place-based factors play in shaping opportunities?: Where a person grows up has a lasting influence on their life chances. This reflects the fact that people born in lower-income regions (i) face persistent barriers to education, employment and upward mobility; and (ii) are less likely to relocate due to greater social and financial constraints. In some OECD countries, people living in deprived regions may be six-to-ten times more likely to be poor than peers living in more advantaged regions (see Figure 3.1). Geographic inequalities affect educational and labour market opportunities throughout life. Students in rural areas systematically underperform their peers in urban areas (see Figure 3.7). Similarly, young people’s prospects for a successful school-to-work transition partly depend on their place of residence. On average in OECD countries, the share of 18-24 year-olds who are not in employment, education or training (NEET) differs by 13 percentage points between best- and worst-performing regions (see Figure 3.11). Finally, significant regional gaps remain in terms of access to health services, internet and public transport (see Figure 3.15).
Policy can contribute to a more level playing field by fostering economic dynamism and strengthening individuals’ capacity to realise opportunities. When designing effective policies for promoting equal opportunity, a key challenge consists in ensuring that responses are adapted to the barriers that individuals and their families encounter and provide them with the right support. Chapter 4 reviews a selected range of measures designed to enhance human capital, economic resources and social infrastructure as part of comprehensive policy responses. While not exhaustive, these measures can help address sources of disadvantage throughout the life cycle and expand access to opportunities regardless of individual circumstances. Besides policies specifically aimed at increasing opportunities, the review underlines the important contribution that tax-benefit systems make towards levelling the playing field in many OECD countries. On average across the OECD, taxes and transfers are associated with a reduction in inequality of opportunity of around a quarter with significant variation between countries (see Figure 4.6).
