Social Mobility and Inequality in Latin America and the Caribbean

Executive Summary

Latin America and the Caribbean (LAC) is a region characterized by profound challenges related to social mobility and inequality. Despite having lifted millions out of poverty in recent decades, LAC remains one of the most unequal regions in the world by international comparisons. Economic inequality acts as a catalyst for social disparities, as income gaps hinder access to essential resources and services, particularly high-quality education. This lack of access, based on socio-economic background, perpetuates existing inequalities and hinders intergenerational social mobility.

Education Quality and Attainment Gaps

While LAC has achieved substantial success in expanding access to education, reaching near-universal primary coverage (97.1%), significant challenges persist at higher levels. School dropout is a major issue in the region, disproportionately affecting students nearing the end of their schooling and those at the lower end of the income distribution. On average, 35% of young people before the age of 23 have not completed secondary school. Furthermore, the gross tertiary completion rate stands at only 25.1%, placing the region 15 percentage points below the OECD average (40%).

Beyond attainment, the quality of education remains a critical concern. Results from the Programme for International Student Assessment (PISA) 2022 reveal low foundational learning levels across the region. In mathematics, three out of four students (75%) in LAC underperform, failing to reach the minimum proficiency Level 2. More than half of 15-year-olds in the region also do not meet basic competencies in reading and science. Worryingly, the average scores of socio-economically advantaged students in LAC are below those of socio-economically disadvantaged students in OECD countries. This widespread low performance, regardless of socio-economic status, reflects a systemic issue of insufficient quality in the education systems, undermining their potential to drive productivity and social mobility.

Adult Skills and Economic Disparities

The skills deficiencies observed in youth persist into adulthood. The OECD’s Programme for the International Assessment of Adult Competencies (PIAAC) reveals that in participating LAC countries, over half of adults scored at the lowest proficiency levels (Level 1 or below) in literacy. In addition, many adults lack basic digital skills; the share of adults who failed the core digital skills test or lacked computer experience ranged from 25.2% in Chile to 43.6% in Peru.

This skill gap is closely linked to economic outcomes. The strong influence of parental education on children’s skill acquisition indicates a persistent intergenerational transmission of status, with differences in literacy proficiency related to parents' education being much higher in countries like Chile (51 points) and Peru (55 points) than the OECD average. Low educational attainment and skills often restrict individuals to low-quality, informal sector jobs, a situation that increases their risk of poverty and affects two-thirds of households in the region.

Aspirations, Vocational Education and Training, and Investment

PISA data highlights a significant misalignment between student ambitions and labour market realities. Students' expectations to work as senior managers or professionals (International Standard Classification of Occupations, ISCO, categories 1 & 2) are six times or more higher than the actual demand in the region's labour force. This misalignment is strongly associated with socio-economic background: 21% of low socio-economic status (SES) students are classified as misaligned, compared to 8% of high SES students.

Strategic vocational training and lifelong learning are essential to bridge these gaps. However, enrollment in upper-secondary Vocational Education and Training programmes in LAC OECD countries remains below the OECD average. Moreover, participation in adult learning is strikingly low, with 63% of adults being "disengaged" from training in countries like Mexico and Ecuador.

This systemic challenge is intensified by relatively low investment; Latin American governments allocated an average of 3.8% of their GDP to education in 2021, compared to 5% in OECD countries. Crucially, none of the countries in the region have surpassed the cumulative spending threshold of USD 75,000 per student, beyond which spending tends to correlate less strongly with improved PISA performance.

Policy Recommendations

To foster inclusive growth and address systemic inequalities, governments must commit to effective policy reforms focused on quality, equity, and skills formation.

1. Increase and Improve Investment: Governments should increase and strategically target educational expenditure, prioritizing quality and equitable outcomes. Reallocating existing educational resources more efficiently is also crucial, especially considering that other countries with similar spending levels or GDP often outperform LAC nations.

2. Prioritize Equity and Quality in Formal Education: Policies must address high dropout rates, particularly for at-risk students, by implementing targeted preventive and reintegration measures. Financial barriers to tertiary education should be removed or lowered through effective grants and student loan mechanisms to increase participation among low- and middle-income sectors.

3. Strengthen Skills Pathways: VET systems should be reinforced, ensuring they are an attractive choice for all learners and include substantial Work-Based Learning components to smooth the transition into the workforce.

4. Implement Equitable Career Guidance: Guidance systems should provide a strong baseline of support for all students but offer more intensive provision to low SES students, compensating for family-based deficiencies in social and cultural capital. This should include first-hand experiences of the world of work to enhance their career options.

By addressing the immediate and long-term needs for high-quality education and skills formation, Latin America and the Caribbean can enhance its educational systems, foster inclusive growth, and build a productive workforce that benefits all citizens.