To Have and Have Not – How to Bridge the Gap in Opportunities

Report

22 September 2025

4. Informing Policy: What can be done to ensure a more level playing field?

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Abstract

This chapter concludes the report by drawing the policy implications from the preceding chapters and discussing how the insights provided can be harnessed to ensure a more level playing field in applied contexts. It proposes a framework as a possible device for informing effective policy responses, based on the barriers to equal opportunity identified in the analysis. This framework relies on two key channels to ensure a more level playing field: (i) policies designed to increase the overall supply of economic opportunities; and (ii) policies designed to support individuals’ capacity to realise the opportunities available to them. Focusing on the second channel, the chapter defines three types of endowments that are necessary for individuals to pursue and realise opportunities: (i) human capital; (ii) economic resources; and (iii) social infrastructure. For each type of endowment, it provides a selected review of policies that can form part of comprehensive packages for promoting equal opportunity. The review notably includes an assessment of the impact of taxes and transfers across countries to shed light on the instruments that may be most effective for achieving this goal.

4.1. Promoting equal opportunities by design

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4.1.1. Moving from the analysis of inequality of opportunity to policies for ensuring a more level playing field

This report’s main contribution consists in analysing inequality of opportunity using a new methodology that can support effective policy interventions. In order to do so, the report extends the analysis of social mobility conducted in OECD (2018[1]) along two dimensions that are of high relevance to policy. First of all, it operationalises an innovative approach for measuring inequality of opportunity to better account for the circumstances that individuals encounter and their influence in shaping outcomes (see Chapters 1 and 2). This approach draws on machine-learning techniques and is solidly grounded both in conceptual and methodological terms (Brunori, Hufe and Mahler, 2023[2]; Roemer and Trannoy, 2016[3]; Fleurbaey and Peragine, 2013[4]). Its application allows the analysis to go beyond the distribution and persistence of outcomes and shed light on the opportunities that are available to individuals and shape their outcomes throughout the life cycle. Secondly, the report provides a more detailed focus on the important geographic dimensions of opportunities by looking at regional disparities in access to key drivers of social mobility including education, employment and essential services (Chapter 3). Here, it draws on the most recent OECD research (OECD, 2025[5]; Almeida et al., 2024[6]).

To help organise and apply the insights from the analysis, this chapter introduces a general framework that can inform policies designed to ensure a more level playing field. The framework is intended as a heuristic device that policymakers can use to make the link between the analysis and its implications for policy. In order to do so, it articulates the main principles for policy intervention. Specific measures can be selected on the basis of the challenges identified by the analysis and of the specificities of national contexts. Figure 4.5 at the end of this section provides a visual representation of the framework.

The proposed framework distinguishes two key channels through which policy can contribute to ensure a more level playing field: economic dynamics and endowments.

From a policy perspective, this distinction can be understood along the following lines:

The economic dynamics channel deals with the capacity of the economy to provide opportunities for individuals. This channel focuses on the aggregate level, on the supply of opportunities and on their distribution across territories. Relevant levers for action include policies designed to increase the overall supply of economic opportunities (macroeconomic policy, trade, competition and regulatory policies…), improve access to opportunities or reduce disparities in their geographic distribution (policies on service provision across levels of government, territorial development policies, local employment and entrepreneurship policies, infrastructure…).
The geographic mobility of individuals constitutes another relevant issue to consider when seeking to address territorial disparities in the supply of economic opportunities. This issue helps underline the importance of place-based policies in ensuring a more level playing field (OECD, 2011, pp. 167-223[7]). Place-based policies are needed to promote opportunities at a local level in contexts where geographic mobility is low and people are likely to have access to a narrower pool of economic opportunities.1 Place-based policies also have an essential role to play in managing transitions effectively in contexts where geographic mobility is high. Geographic mobility creates a need for additional investment in the places to which people relocate, notably to expand the supply of housing and services. It also implies a need for additional investment in the places from which people are moving to compensate for the economic effects of population loss and prevent decline in “shrinking” cities and regions (OECD, 2025[8]).2
The endowments channel deals with the capabilities and resources that individuals need to realise the opportunities available to them. This channel is complementary to the previous one and provides a focus on the individual level, on the demand for opportunities and on measures that can strengthen it. Relevant levers for action include policies that promote equal opportunity by investing in the capabilities of individuals themselves or in the material resources they need to realise them, and by addressing potential gaps in these “endowments” that are due to circumstances beyond individuals’ control and may prevent them from freely pursuing available opportunities.
The framework identifies three broad types of endowments that are necessary for individuals to freely pursue and realise the opportunities available to them: (i) human capital; (ii) economic resources; and (iii) social infrastructure. While not exhaustive, this taxonomy of endowments covers the critical domains that shape opportunities at the individual level as generally established in the economic and sociological literatures (Becker, 1996[9]; 1964[10]; Bourdieu, 1986[11]; 1972[12]).

As defined in this framework, there are two fundamental objectives for policy: (i) to promote the creation of opportunities throughout the economy; and (ii) to support individuals’ capacity to realise available opportunities, including by reducing sources of disadvantage. The framework proposed in this chapter is not prescriptive and offers broad scope for policymakers to set objectives in line with their own priorities, with societal preferences and with the specificities of their national contexts. Nonetheless, it takes as a basic premise (i) that economic dynamics and endowments constitute essential conditions for equal opportunity; and (ii) that policy cannot achieve this goal without seeking to address both aspects.3 Furthermore, while the framework distinguishes between different types of endowments for analytical reasons, it is the combination of and interaction between these endowments that enables individuals to realise in practice the opportunities available to them. Also, from an intergenerational perspective, the endowments of parents contribute to shape the opportunities that children have and will have in the future as adults, as highlighted in previous chapters. Policies identified under this channel should therefore have a broader scope and aim to support individuals in developing all of the different endowments they need to realise opportunities. This implies reducing the sources of disadvantage that may prevent individuals from freely pursuing and realising opportunities or restrict those of their children, notably when these sources of disadvantage are associated with a lack of endowments.

This chapter provides a specific focus on the endowments channel as a lever for ensuring a more level playing field. The OECD has developed a significant body of evidence and studies on the policies that can strengthen the economy’s capacity to deliver opportunities for individuals and bridge territorial divides.4 As such, this chapter concentrates on the endowments channel with the aim of complementing existing work and filling knowledge gaps. The following section analyses the role played by the different endowments identified in the framework – human capital; economic resources; and social infrastructure – as drivers of economic opportunities and their implications for policy. For each type of endowment, it seeks to (i) identify appropriate welfare concepts for analysis; (ii) determine the set of relevant circumstances that shape these endowments and should be included in the analysis; (iii) define possible challenges and barriers to equal opportunity that the analysis may highlight; and (iv) map these challenges to key policy areas and measures that can be taken to address them. A number of relevant policy options are discussed in Section 4.2 below.

4.1.2. Taking stock of endowments as key channels for ensuring a more level playing field

Human Capital

The role of human capital as a key determinant of economic opportunities and social mobility is well documented. In line with standard OECD definitions, human capital is understood here as “the stock of knowledge, skills, and other personal characteristics embodied in people that helps them to be productive” (Égert, de la Maisonneuve and Turner, 2022[13]; Botev et al., 2019[14]). This definition covers a wide range of attributes acquired through education, personal experience and the family environment. These attributes include technical, cognitive and socio-emotional skills; knowledge; health; and cultural understanding. Specific components of human capital can be distinguished, such as:

Cultural capital, which covers the general values and norms that help individuals adapt to educational and professional environments;
Educational capital, which covers formal academic skills, cognitive ability, credentials and networks that promote social and economic mobility; and
Physical and mental health, which act as enabling conditions for learning and the acquisition of skills, particularly early in life.

Human capital and its different components directly affect a person's employability, position in the labour market and earning potential. Policies that promote educational opportunities and support individuals’ capacity to develop their human capital have a central role to play in ensuring a more level playing field, as highlighted in OECD (2018, pp. 298-307[1]).

Socio-economic background and other circumstances shape human capital and the opportunities to develop it. Socio-economic background has a strong influence on educational outcomes. In the latest round of the OECD Programme for International Student Assessment (PISA) survey conducted in 2022, students with a higher socio-economic background – as measured by the PISA index of Economic, Social and Cultural Status (ESCS) – performed better than their more disadvantaged peers in all countries. On average in OECD countries, disadvantaged students are seven times more likely than advantaged students to not have achieved basic proficiency in mathematics and in science at age 15 (OECD, 2023[15]). While the effect of socio-economic background is consistent, the degree to which variance in educational outcomes can be attributed to socio-economic factors – the so-called “intensity of the social gradient” – varies across countries. Conversely, on average across the OECD, 10% of disadvantaged students were “academically resilient” in mathematics, meaning that they scored in the top quarter of mathematics performance in their own country in PISA 2022 (see Figure 4.1) and 11% were resilient in reading and science. Health outcomes are also shaped by socio-economic factors. For example, in many OECD European countries, “health penalties” can be observed for individuals with parents with lower educational backgrounds. The risk of long-standing illness is 7 percentage points higher on average across OECD European countries for individuals whose parents have lower educational attainment and the probability of experiencing unmet medical needs is also 1.7 percentage points higher overall (see Figure 4.2).

Figure 4.1. Traditional measures of equality of opportunity show that there is scope for promoting a more level playing field in education in many OECD countries
Copy link to Figure 4.1. Traditional measures of equality of opportunity show that there is scope for promoting a more level playing field in education in many OECD countries

Disparities in performance in mathematics by socio-economic background and share of disadvantaged students who are top performers in mathematics, by country, 2022

Identifying and addressing barriers to equal opportunity in education can help ensure a more level playing field and increase overall investment in human capital by enabling more students to reach high levels of proficiency in core skills. Understanding what drives the observed gaps in educational outcomes between advantaged and disadvantaged students (socio-economic gradient) and conversely what factors allow students to overcome them (academic resilience) is of high value to policy. Socio-economic background, while important, is not the only factor explaining these gaps. Analysis conducted in OECD (2018[1]) confirms first of all that school quality has a significant effect on the intensity of the social gradient. Similarly, it shows that motivational factors – including confidence in one’s academic abilities, self-efficacy and lower levels of test anxiety – are among the strongest predictors of academic resilience (OECD, 2018, pp. 263-269[1]). Applying the methodology used in the report to these outcomes, as was done for income in Chapter 2, may yield further relevant insights by taking account of a broader range of factors and by highlighting the role played by factors beyond individuals’ control. Similarly, the analysis in Chapter 3 sheds light on the spatial dimensions of educational opportunities and quality.5

Figure 4.2. On average, across OECD European countries, individuals with parents with lower educational backgrounds tend to suffer health penalties
Copy link to Figure 4.2. On average, across OECD European countries, individuals with parents with lower educational backgrounds tend to suffer health penalties

Differences in health outcomes between individuals with low and high parental educational background among the population aged 25-59, by country, 2023

Economic Resources

People need sufficient economic resources to be able to invest in their own human capital and that of their children. “Economic resources” are understood in a broad sense as the financial and material means that individuals and households can use to invest in human capital, support personal development and pursue opportunities. Economic resources are a key determinant of opportunities and social mobility at the individual level. They enable the development of human capital and offer protection from adverse shocks (OECD, 2023[16]; 2018[1]; 2015[17]). Economic resources play an equally important role from an intergenerational perspective. They allow parents to meet educational expenses including the purchase of books, tutoring, school and university fees, as well as extra-curricular activities, and to provide the financial support necessary for decisions such as starting a business or purchasing a home. Similarly, they can help individuals meet health expenses and ensure that children receive necessary medical care, proper nutrition and physical well-being, which are foundational for the realisation of children’s full potential. Conversely, families experiencing income poverty, material deprivation or financial stress face significant barriers to investment in their children’s human capital, with lasting consequences in terms of the latter’s opportunities, outcomes and prospects for social mobility (OECD, 2021[18]; 2018[1]).

Policies designed to ensure a more level playing field can benefit from a clearer picture of the circumstances that prevent individuals from accruing sufficient levels of economic resources. As shown in Chapter 2 for income, economic resources may be shaped to a significant extent by factors that are beyond individuals’ control. Applying the same methodology to other measures of economic resources, notably wealth, can yield additional insights for addressing sources of disadvantage and supporting individuals’ capacity to pursue and realise opportunities. Wealth plays a highly important role as a financial buffer against economic shocks.6 From an intergenerational perspective, wealth is also a key circumstance determining opportunities. Parental wealth ensures higher living standards for children, provides them with greater financial security during their upbringing and enables sufficient investment in their human capital which leads in turn to higher educational attainment (Eurofound, 2021[19]). Furthermore, OECD evidence shows large divides in the distribution of household net wealth.7 In the average OECD country, the wealthiest 10% of households own over half of all household wealth, while the bottom 40% hold only around 4% (Balestra, Caisl and Hermida, 2025[20]).

Understanding the main channels for the accumulation of wealth and the barriers that may prevent individuals from accruing sufficient levels can help ensure a more level playing field. Two channels in the transmission of wealth may be of particular interest, given current trends in the distribution of household wealth in OECD countries and the role these channels play in shaping opportunities throughout life. These channels are: (i) gifts and inheritance; and (ii) the transmission of homeownership (Balestra, Caisl and Hermida, 2025[20]).8 The effects of both these channels on the distribution of economic resources and opportunities are significant. Around 2021, around one in three households headed by someone in their 60s in OECD EU countries had received at least one inheritance or gift. The largest 10% of transfers were equivalent in value to approximately six years of median gross income (OECD, forthcoming[21]). In several EU countries, being the recipient of a substantial gift or inheritance during one’s lifetime has been found to have a stronger effect on average net wealth than the premium associated with having a university degree compared to a primary-level education for non-recipient peers (Eurofound, 2021[19]). Furthermore, intergenerational transfers tend to have a strong and cumulative impact on asset building. As shown in Figure 4.3, among households headed by individuals aged 60-79, those that received a transfer at any point in their lifetime show a significant wealth premium relative to non-recipients. However, the size of this premium varies markedly depending on the timing of receipt, with earlier transfers associated with substantially larger gains. Recipients who inherited or received major gifts before the age of 30 exhibit the highest long-term wealth gains (OECD, forthcoming[21]). This highlights how early financial support can accelerate wealth accumulation at a critical stage of life.

Figure 4.3. On average, wealth transfers are associated with a larger wealth premium when they are received earlier in life
Copy link to Figure 4.3. On average, wealth transfers are associated with a larger wealth premium when they are received earlier in life

Average wealth gap between recipients and non-recipients aged 60-79 by the age at which the transfer was received, OECD-14 average, around 2021

Facilitating the access to homeownership constitutes an important lever through which policy can reduce disparities in wealth, though trade-offs with other policy objectives and other sources of household saving need to be taken into account (Causa, Woloszko and Leite, 2019[22]). Housing constitutes the primary store of wealth and main liability for a large majority of households in OECD countries. Recent OECD evidence shows that rising house prices have made homeownership less accessible for the bottom 40% of households in terms of net wealth and for younger cohorts, in particular those from low-income households (Balestra, Caisl and Hermida, 2025[20]; OECD, 2025[23]). Furthermore, from an intergenerational perspective, parental homeownership significantly influences the likelihood of children becoming homeowners themselves, even when controlling for wealth levels – either through direct inheritance or by facilitating access to mortgages.9 This is particularly relevant in a context where the relation between parental homeownership and current homeownership has strengthened in many countries. For example, across OECD European countries in 2023, having homeowning parents increased the likelihood of owning a home oneself – whether outright or with a mortgage – by age 38-46 by 18.7% compared to peers whose parents were renters, up from 12.7% in 2011 (see Figure 4.4).10 Moreover, the parental advantage in access to homeownership tends to be more pronounced in regions with rising house prices, particularly in terms of securing mortgages (Filauro and Parolin, forthcoming[24]). Spatial dimensions also matter here, as the location of housing can influence access to opportunities. As discussed in Section 4.2.3 below, well-designed social housing policies have a role to play in striking a balance between providing security and enabling mobility.

Figure 4.4. The intergenerational transmission of homeownership has increased in many OECD European countries in the decade following the Global Financial Crisis
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Persistence of homeownership across generations (comparing current owners aged 38 to 46 and their parents), by country, 2011 and 2023

Social Infrastructure

Individuals need more than just human capital and economic resources to realise the opportunities available to them. Non-material resources also play an essential role in enabling effort and human capital to translate into actual outcomes. For example, the services, networks, relationships, trust and shared norms that exist within a community are widely recognised as a form of “social capital” (Chetty et al., 2022[25]; Stiglitz, Fitoussi and Durand, 2018[26]; Scrivens and Smith, 2013[27]; Putnam, 2001[28]). These resources provide individuals with information and support. They connect them to jobs and other economic opportunities that may otherwise have remained inaccessible. They also constitute a safety net that can mitigate the effects of adverse circumstances and life events. Here, the broader notion of “social infrastructure” is used to emphasise the characteristics of the “place” where individuals live (i.e., neighbourhood, community…) and its impact on their capacity to realise the opportunities available to them, in addition to the elements of “social capital” that may be embodied in the individuals themselves.11 Physical institutions, facilities and systems are key components of social infrastructure (Van de Ven, 2021[29]). However, non-material elements are equally important. For example, the extent and quality of social networks are strong enablers of career and educational opportunities (Gemar, 2024[30]; Fabrique Spinoza, 2024[31]; Cox, Steinbugler and Quinn, 2021[32]).

Current OECD research can shed light on the material and non-material elements that contribute to social infrastructure. The OECD has an extensive body of work on the different aspects of social capital and how they contribute to individual well-being and social cohesion. This notably includes work on trust in public institutions (OECD, 2024[33]) and on loneliness and social connectedness (OECD, forthcoming[34]; Mahoney et al., 2024[35]). Evidence confirms that social cohesion, sense of belonging to society and civic engagement have a positive influence on children's mental and physical health outcomes, long-term socio-economic outcomes and academic resilience (Schleicher and Scarpetta, 2024[36]; Marquez et al., 2024[37]; Jagannathan et al., 2023[38]; Wang et al., 2023[39]; Minh et al., 2017[40]). Furthermore, case studies suggest that, at least in some countries, children from deprived backgrounds face higher barriers to participation in the structured forms of activity, such as volunteering, that contribute most to community cohesion and developing social capital (Camia, Zimmermann and Lischke, 2024[41]). Similarly, the physical components of social infrastructure, including essential services and the facilities that provide them, play an important role in supporting individual well-being, social cohesion and trust (OECD, 2023[42]; 2023[43]; Algan, Malgouyres and Senik, 2020[44]). In this perspective, housing is not only a store of wealth but also an important component of social infrastructure. Policies designed to promote affordable housing constitute a lever for enabling access to economic opportunities and for building social cohesion (OECD, 2023[45]; 2020[46]; Holm, 2024[47]; Hulse and Stone, 2006[48]).

Territorial disparities in social infrastructure limit opportunities for large segments of the population and due focus must be given to the importance of “place”.12 First of all, as highlighted in Chapter 3, territorial disparities in access to opportunities partly reflect differences in levels and quality of social infrastructure. This can notably be seen when looking at ease of access to essential services and the “hard” physical components of social infrastructure that support their provision, including schools and educational facilities, hospitals and employment centres. For example, most people are within walking distance of early childhood education and care (ECEC) centres, with walking times of 20 minutes or less for the median person in a large majority of European regions. However, access remains more limited in some remote or underserved regions and non-negligible differences may exist between accessibility for kindergartens and nurseries (Almeida et al., 2024[6]). Similar results are found for access to paediatric medical services at the neighbourhood level (OECD, 2025[49]).

The Social and Solidarity Economy can help reduce spatial inequalities by leveraging and strengthening social infrastructure. In a number of OECD countries, the Social and Solidarity Economy (SSE) plays a significant role in promoting opportunities for vulnerable populations and reducing spatial inequalities (OECD, 2024[50]).13 The SSE builds on and contributes to reinforce “softer” non-physical forms of social infrastructure, such as family and community networks, which also vary across locations.14 As highlighted in Chapter 3, the appropriate scale for analysing the link between social infrastructure and “place” may vary depending on the particular component studied. Family and community networks, for instance, mainly operate at the neighbourhood-level where they contribute to foster social capital and influence its intergenerational transmission (Hout, 2012[51]; Dika and Singh, 2002[52]). Also supporting this argument, a number of studies have emphasised the role of neighbourhoods in shaping life trajectories, opportunities and social capital (Moreno-Monroy et al., 2025, forthcoming[53]; Soria and Medina, 2025[54]; Chetty and Hendren, 2018[55]; Sharkey and Faber, 2014[56]). These findings emphasise the importance of policies aimed at improving neighbourhood conditions (OECD, 2025[49]; Parolin et al., 2025[57]).

Place affects opportunities directly and through its influence on access to essential resources and services. Place is a circumstance that affects the overall childhood environment and continues to shape opportunities throughout life. Where one grows up is a feature that is largely beyond an individual's control and, even in adulthood, a majority of citizens in OECD countries continue to reside near the place where they were born (OECD, 2025[5]). Illustrating this, region of residence is found to account for a significant part of the variation in inequality of opportunity in income when it is included in the set of circumstances in Chapter 2 (see Box 2.1 and Figure 2.3). Place is also important insofar as it interacts with other circumstances and either amplifies or dampens their effect on the pool of opportunities and individuals’ ability to realise them.

Identifying the Challenges, relevant Circumstances and Policies to address them

When designing policies that focus on endowments, it is important to consider the nature of the challenges that individuals encounter. Different types of barriers may limit individuals’ capacity to realise the economic opportunities available to them. These barriers may relate first of all to a lack of endowments and require policies that can support their development. This may reflect for example a lack of or mismatch in skills that restrict economic opportunities, insufficient material or financial resources to invest in human capital, as well as limited social infrastructure connecting individuals to opportunities. Other factors may also need to be considered beyond the individual and their immediate environment. Structural barriers may influence individual endowments and the extent to which they translate into actual outcomes. Stigma and discrimination, where they are present, can negatively impact on the assessment of an individual’s skills and limit their opportunities despite adequate human capital (OECD, 2025[58]; 2022[59]; 2010[60]; Hardy and Schraepen, 2024[61]; Valfort, 2020[62]; OECD, 2008[63]). Similarly, spatial segregation or financial fragility can reduce individuals’ ability to leverage available social infrastructure and economic resources to improve their prospects (OECD, 2023[16]; 2018[64]). Not all barriers to equal opportunity may be amenable to policy. While issues of access and endowments can often be addressed directly through targeted interventions, overcoming structural challenges may require broader forms of action, including attitudinal or institutional change. While they are important to underline, addressing structural challenges of this kind remains largely beyond the scope of the discussion and review of policies conducted in this chapter.

The set of relevant circumstances must also be properly defined in order to understand what shapes individual endowments and their evolution over time. Chapters 1 and 2 use a defined set of circumstances to assess inequality of opportunity in terms of income (see Table 1.1). In the context of this report, the selection of circumstances is partly constrained by issues of data availability and comparability. When applying the same methodology to other outcomes and types of endowment, the set of relevant circumstances would need to be expanded to reflect their specificities. Box 4.1 below outlines possible circumstances that could be considered in an expanded set and used to analyse a wider range of endowments that are key for understanding individuals’ capacity to realise opportunities. This includes circumstances that are part of the set listed in Table 1.1, for which comparable data are available, as well as additional relevant circumstances for which this may not be the case.

Box 4.1. Analysing individual endowments: What circumstances are relevant?

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Many different types of circumstances are relevant for understanding how endowments are shaped and whether individuals are able to leverage them to realise opportunities. In addition to the set of key circumstances already identified in Chapter 1, other key factors contribute to the formation of individual endowments. Identifying these circumstances and factors can inform policy interventions in relevant ways and at various levels (e.g., early childhood education and care policies recognise the importance of investing in human capital from early age; inclusive educational policies are designed to provide the best educational opportunities to disabled children and children with medical conditions…).

A non-exhaustive list of key circumstances for assessing individual endowments includes:

Individual characteristics

Circumstances already included in the analysis:

Sex: The analysis in Chapter 2 highlights the significant contribution of gender to inequality of opportunity in earnings. Gender disparities are also well documented in human capital endowments (OECD, 2023[15]).
Country of birth and migrant parentage: Migrants and the children of migrants can encounter additional barriers to the development of human capital and access to social infrastructure. For example, upper secondary completion rates are lower for students who are migrants themselves or children of migrants. Similarly, 20% fewer students who are migrants or have migrant parentage achieved a level of proficiency in mathematics on average in PISA 2022 (OECD, 2024[65]; 2023[15]).

Key additional circumstances to consider:

Health conditions in early age: Low birth weight and other conditions emerging in early years can have a lasting impact on development. Similarly, exposure to adverse experiences, particularly in childhood, can undermine emotional well-being and affect long-term economic outcomes (OECD, 2021[18]).
Disability status: Disability has a direct impact on economic outcomes by limiting individuals’ access to education, skills programmes and health-improving schemes, and in some cases by preventing or precluding the acquisition of certain skills. It may also have an additional indirect impact in situations where disabled populations encounter discrimination and stigma (OECD, 2025[58]; 2022[66]; Hardy and Schraepen, 2024[61]).
Minority or indigenous status: Minority and indigenous status can be considered as a relevant circumstance in situations where there is discrimination and minority or indigenous populations suffer from worse economic outcomes and more limited opportunities (OECD, 2019[67]).

Parents’ socio-economic background

Circumstances already included in the analysis:

Parental education and occupation: The analysis in Chapter 2 underlines the role that parental socio-economic background plays as a determinant of income disparities and the importance of considering both maternal and paternal background. Parental socio-economic background plays a similar key role in shaping other types of endowments and outcomes (see above).

Key additional circumstances to consider:

Parental wealth: Parental wealth was not included in the analysis in Chapter 2 due to issues of data availability. It constitutes an important factor shaping opportunity, as well as a priority area for future work (Balestra, Caisl and Hermida, 2025[20]).

Childhood environment

Circumstances already included in the analysis:

Homeownership status of parents: Exposure to homeownership growing up may have a positive impact on economic and educational outcomes independent of household wealth, as has been observed in some countries (Aarland et al., 2021[68]).
Parental presence and parenting style: Different dimensions of parenting affect children’s outcomes (Ulferts, 2020[69]). Parental presence may for example guarantee greater economic stability and family support. Parenting style may also influence child learning and the formation of human capital.
Degree of urbanisation of the region of residence: As highlighted in Chapter 2, degree of urbanisation explains close to 10% of inequality of opportunity in terms of income on average across countries. Chapter 3 also underlines the importance of territorial divides in determining access to key drivers of economic opportunities.
Place of residence: In Chapter 2, region of residence is taken as an imperfect proxy for the broader question of access to infrastructure, affordable quality education and healthcare (see Box 2.1). Building on the analysis conducted in Chapter 3, efforts could be strengthened to develop comparable data on disparities and opportunities at fine territorial scales including local areas and neighbourhoods.

Key additional circumstances to consider:

Language spoken at home: The language spoken at home is a further circumstance that can affect school readiness and the ability to integrate into primary language environments (OECD, 2018[70]).
Household size and structure: The number of dependents in a household and the household structure affect the time and resources parents can allocate to children’s education and development. As such, they may disadvantage children in larger or non-traditional households (OECD, 2011[71]; Chapple, 2009[72]).
Interpersonal trust and social norms: These elements of social infrastructure can influence economic outcomes, notably by shaping attitudes towards education, gender roles and career aspirations.
Community cohesion and public safety: Strong and cohesive communities provide safety and collective support. Social cohesion and community participation within a neighbourhood can offer children opportunities to explore personal interests, engage in social activities and build relationships with peers and adults outside their homes (McKendrick, 2014[73]). Public safety directly impacts mental well-being and the ability to realise opportunities (Marquez et al., 2024[37]; Wang et al., 2023[39]).

Reflection may be needed to determine at what point in the life cycle of an individual different circumstances should be measured to best capture their influence on opportunities. For example, as argued in Chapter 1, focusing on disability early in life may be most relevant from the perspective of inequality of opportunity, as it would be most clearly distinct from individual choices and therefore likely to be beyond an individual’s control.

The policy framework proposed in this section is designed to support policymakers in identifying effective responses for ensuring a more level playing field. Figure 4.5 provides a visual representation. This framework recognises that inequality of opportunity arises from a combination of different causes. These causes notably include a limited supply of opportunities, uneven access to those that are available and inadequate endowments that may prevent individuals from realising them. The resulting barriers to equal opportunity contribute to skew the playing field by increasing the influence of inherited circumstances and limiting the extent to which individual outcomes are shaped by factors related to personal agency. On this basis, the framework seeks to identify policies that can help address these challenges and develop effective and comprehensive strategies for ensuring a more level playing field. The following section discusses a broad and balanced range of measures, focusing on the different types of endowments covered by the framework. As such, the discussion in this chapter aims more specifically to strengthen the capacity of all individuals to realise the opportunities available to them by enhancing human capital, economic resources and social infrastructure.

Figure 4.5. A framework for informing effective policies to ensure a more level playing field
Copy link to Figure 4.5. A framework for informing effective policies to ensure a more level playing field

The following section proposes to review a selection of policies that can help address the potential barriers to a level playing field identified in the course of the analysis. Several points should be borne in mind here. First, as already mentioned, the discussion in this chapter will focus on the endowments channel and on policies designed to support individuals’ capacity to realise available opportunities and address sources of disadvantage that may prevent them from doing so. The economic dynamics channel and policies designed to increase the overall supply of opportunities are treated in greater detail in other OECD publications. Second, the range of policy drivers that contribute to shape individual endowments, and through them the capacity to pursue and realise opportunities, is extremely broad and diverse.

The discussion in this section does not aim to cover the full range of these policies. Its scope is more modest and intended to provide a selected review of policy options for addressing challenges that may be identified based on the analysis. The options discussed have been chosen with a view to their relevance and to complementing existing OECD policy recommendations. For example, policies designed to ensure a more level playing field by promoting the development of human capital have already been extensively studied and their benefits highlighted, notably in OECD (2018, pp. 289-307[1]). Greater attention is therefore given to policies that focus on other types of endowment – i.e., economic resources and social infrastructure. The selection of policies includes a combination of (i) traditional “core” policies that have been identified by the literature as effective for promoting opportunities and ensuring a more level playing field; and (ii) more innovative “new” measures that have been highlighted in the literature or in policy debates as promising options to explore further.15 The aim in doing so is to provide an overview of policy options that is both grounded in the established experience of “what works” and forward-looking.

Where possible, the potential downsides of proposed policies will be taken into account to ensure the discussion is relevant for policy and can help identify measures that are effective. Measures that contribute to a more level playing field bring large benefits, but they may also have “downsides” which need to be considered when designing effective policy responses, as underlined for example in Peragine and Biagi (2019[74]).

The “downsides” considered in the discussion are mainly of three types:

The fiscal implications of measures to ensure a more level playing field: Many of the proposed policy options imply increased public spending in the form of grants, subsidies and cash transfers or the direct provision of goods and services. An important part of the discussion relates to the fiscal cost of these policies, the measures that can be taken to cover them (for example, through higher taxes, increased levels of public debt or spending cuts in other areas) and the direct or indirect impact these measures may in turn have on equal opportunity. While decisions concerning appropriate funding mechanisms for these policies are the responsibility of national governments and are therefore not an object of discussion in this section, some of the measures reviewed constitute potentially effective sources of revenue, as well as levers for ensuring a more level playing field. This is notably the case for the discussion of wealth and inheritance taxes in Section 4.2.2 below. More broadly, current research on the “return on investment” for social policy16 and the creation of the OECD Joint Network of Senior Budget Officials and Senior Social Protection Officials can provide valuable support on this issue. In particular, they can help policymakers determine how to address spending pressures on social protection most effectively and identify high-impact areas for social investment. The analysis of the effects of tax-benefit instruments on inequality of opportunity conducted in Section 4.2.2 also provides an example of the insights that can be drawn from the methodology used in this report.
Political economy constraints: The political feasibility of the proposed measures constitutes another important element to take into account for policy guidance. While conditions and barriers vary depending on national contexts, the implementation of certain types of measures has proven consistently difficult across countries due to limited public support for these measures. Political economy constraints are discussed in the case of wealth and inheritance taxes, one type of measure where constraints of this kind have proven topical (OECD, 2021[75]). More broadly, current OECD work on participatory processes, public communication and the public acceptability of reforms can provide policymakers with guidance on how to reflect and address these constraints in the design and implementation of policies (OECD, 2025[76]; 2023[77]; 2022[78]).
The motivational aspects of policies: The potential impact of policies on individual motivations and the extent to which they contribute to incentivise effort or not are an important part of the debate on equal opportunities (Fleurbaey, 2008[79]).17 As detailed in Chapter 1, the indicator of inequality of opportunity developed in this report relies on an ex ante approach (see Box 1.3). As such, it does not measure levels of effort directly and does not shed light on motivational issues. While the following sections will not provide a systematic discussion of these issues, where possible, they will be highlighted and addressed in specific cases.

4.2. A review and discussion of policies to ensure a more level playing field

Copy link to 4.2. A review and discussion of policies to ensure a more level playing field

This section discusses and reviews policies relating to the different types of endowment covered by the framework: human capital (Section 4.2.1); economic resources (Section 4.2.2); and social infrastructure (Section 4.2.3). The objective in doing so is to identify policies that can contribute to level the playing field by strengthening individuals’ capacity to realise the opportunities available to them.

4.2.1. Policies for promoting equal opportunities by building human capital

Addressing the circumstances that limit the development of human capital requires coherent policy responses that can span multiple domains. Governments must seek to establish skills systems that equip individuals with the right competences, promote adult learning and provide individuals with opportunities to develop and fully utilise their human capital throughout the life cycle. As emphasised in the updated OECD Skills Strategy, coordination and collaboration across all levels of government, as well as between government and stakeholders, are crucial to achieve this objective (OECD, 2019[80]). Particular focus should be put on policies targeting the early formative years of life, given the high returns on early investment in human capital and the strong influence that the early age environment has in shaping life outcomes, and notably disadvantage, in key areas including education and health (OECD, 2021[18]; 2019[81]; 2018[1]; Attanasio, Cattan and Meghir, 2022[82]; Heckman and Carneiro, 2003[83]). Early childhood interventions need to be sustained throughout later stages of education to have a lasting effect (OECD, 2022[84]; 2002[85]). This underlines the importance of school-focused policies and of policies aimed at supporting learning environments beyond school, notably family, firm and community-based. Throughout the working life, effectively designed policies can promote skills development and adult learning to enhance individuals’ economic opportunities and facilitate job transitions (OECD, 2024[86]; 2017[87]). Finally, where structural barriers impede the development and rewarding of human capital, additional measures may be needed to address their effects and ensure a more level playing field (OECD, 2025[58]; 2023[88]).

Early interventions

Evidence confirms that investing in early childhood education and care (ECEC) services has positive returns for the formation of skills and capabilities, as well as health outcomes. Childcare programmes have been shown to improve children’s well-being, educational performance and socio-economic outcomes in young adulthood (OECD, 2025[89]). Their impact tends to be particularly strong for children from disadvantaged backgrounds, thereby compensating for the effects of adverse circumstances and enabling a larger share of the population to develop adequate levels of human capital (OECD, 2021[18]; 2016[90]; van Huizen and Plantenga, 2018[91]; Havnes and Mogstad, 2015[92]). The evidence on the value of investing in ECEC is well established and will not be covered in greater detail here. Relevant policy recommendations in this area include reducing barriers to access to ECEC, notably in terms of the cost, proximity and availability of quality ECEC facilities, as well as addressing information gaps regarding ECEC services (OECD, 2025[89]; 2017[93]).

Supporting broader learning environments beyond school is also essential to build human capital. While formal schooling plays a central role in child development, human capital is significantly influenced by factors outside the school environment (Björklund, Lindahl and Lindquist, 2010[94]). In this perspective, the home learning environment and community-based forms of learning should also be considered as important and complementary sources of educational opportunities. Home learning environments can be effectively supported through measures such as evidence-based parenting programmes, home visits for at-risk households and financial subsidies. These measures can help families create the enabling conditions necessary to their children’s educational success and to overcome adverse circumstances (OECD, 2011[71]). For example, mentoring programmes that include a focus on engagement with parents can help improve the educational outcomes of children and strengthen support at community-level by building family-school relations (OECD, 2021[95]; Agostinelli, Avitabile and Bobba, 2025[96]).18 A variety of behavioural interventions have also proven effective in helping families reduce gaps associated with socio-economic status and address barriers to the development and transmission of human capital. These interventions range from simple text-based nudges to conditional forms of cash transfer.19

School-focused and adult learning policies

Governments in OECD countries have used school funding equity policies to promote educational opportunities. School funding policies allocate additional financial and human resources to the schools that need them most. This includes schools in remote areas, given the gaps in educational outcomes between urban and rural schools highlighted in Chapter 3.20 Doing so can reduce the impact of inherited circumstances on the educational outcomes of students with less advantaged backgrounds and ensure broader access to high-quality education and training (OECD, 2021[97]; 2016[98]). Available evidence suggests that traditional measures of educational equity, such as the student/teacher ratio and levels of school segregation, are also correlated with inequality of opportunity – with higher ratios associated with higher levels of inequality in EU countries (Palmisano, Biagi and Peragine, 2022[99]). Two main approaches are used to address the differing needs of schools: (i) integrating additional resources into regular funding, such as weighted formulas for specific student groups; or (ii) targeted programmes and grants for specific students, schools or regions, such as extra funding for socio-economic disadvantage. Many school systems that provide additional resources for disadvantaged schools use a mix of both, often supplemented with “in-kind” support such as additional teaching hours or staff. Partnerships and networks of collaboration between high-performing and low-performing schools can also improve overall performance (OECD, 2012[100]).

School choice policies have also been implemented in many OECD countries as a means to empower parents and promote educational opportunities. A key challenge here consists in effectively balancing the opportunities that school choice provides for students and parents with the possible negative impact they may have on the outcomes and opportunities across the school system as a whole, notably by crowding out disadvantaged and low-performing students (OECD, 2019[101]).21 The design of school choice policies plays a crucial role in maintaining this balance. OECD evidence suggests for example that two types of school choice programmes – flexible enrolment schemes and programmes using a weighted funding formula – can be compatible with equity considerations when designed properly (Musset, 2012[102]).22

Effective teaching strategies can help students overcome the penalising effects of adverse circumstances. Motivational factors play an important role in improving educational performance and in fostering academic resilience in students from disadvantaged backgrounds (OECD, 2018, pp. 263-269[1]). Teaching strategies that help promote positive attitudes, student engagement and self-efficacy may therefore lead to enhanced educational performance, with students from less advantaged backgrounds being likely to benefit most. Effective monitoring processes to identify struggling students and targeted interventions to support them are essential levers for promoting educational opportunities and reducing the risk of dropout and early school leaving (Lyche, 2010[103]). In this respect, grade repetition may prove costly in terms of educational opportunities and outcomes.23 Inclusive admission strategies in teacher education institutions may also help better engage with and cater to the specific needs of students from disadvantaged backgrounds by ensuring greater diversity among the teaching staff (Brussino, 2021[104]). Active parental engagement also constitutes an important element in supporting students’ progress, as highlighted above.

School and career guidance systems can help shape motivation and increase career preparation, particularly for students with disadvantaged backgrounds. Students with lower prospects for a successful transition into the labour market also tend to be less likely to engage in career development and preparation during secondary education (OECD, 2019[105]). Furthermore, circumstances such as gender, migrant background and parental background influence career ambition and expectations, even for similar levels of education. For example, students with low socio-economic backgrounds are more likely to underestimate the need for tertiary education to achieve their career goals and less likely to participate in school-managed career development activities compared to their peers. Similarly, girls and migrant students both tend to engage less in career development activities that are strongly linked to better employment outcomes, particularly those involving direct contact with employers. While both groups are more ambitious than boys and native-born students, their career plans tend to focus on a limited range of jobs, highlighting the need for more effective career guidance with an emphasis on the exploration of a broader range of career options.24

Underperforming students who faced unfavourable circumstances during early childhood should be provided with “second chance” learning opportunities as adults. For disadvantaged students entering the labour market, targeted support should be deployed to facilitate access to adult education and training. Adult education constitutes a source of learning and skills development opportunities, as well as a means to address the effects of early disadvantage that may not have been overcome during schooling years. Well-designed adult learning programmes tend to focus on four key objectives (OECD, 2017[93]). First, they rely on a combination of education, training and practical job experience to enhance employability. Second, they offer targeted support for adults with low educational attainment, particularly those lacking basic literacy and numeracy skills.25 Third, they actively seek to facilitate participation in adult education and remove barriers through financial mechanisms such as co-financing, tax credits and allowances. Finally, delivery methods need to take account of the specific constraints affecting target populations to enable broader and more inclusive access to learning opportunities, through flexible and behaviourally-informed design. Existing monitoring frameworks can help ensure that adult learning systems are effective and contribute to a more level playing field (Sekmokas et al., 2024[106]).

Financial incentives for skills development

Financial incentives are essential for promoting education and training, particularly for low-skilled and displaced workers. Increasing existing levels of adult learning constitutes a high priority for many OECD countries.26 Governments use a range of incentivising measures – such as subsidies, tax credits and subsidised loans – to steer education and training decisions, increase investment in human capital and achieve a better match between the supply of and demand for skills. Experience from OECD countries confirms that incentivising measures are more successful when they are adapted to individual circumstances. Furthermore, several challenges need to be addressed when designing effective and inclusive financial incentives for skills development. Market failures relating to capital, education and training may disproportionately reduce the access to upskilling opportunities for individuals with disadvantaged backgrounds and low-educated workers. These disparities in skills acquisition compound existing inequalities in labour market outcomes by limiting lifelong learning opportunities for those who would need and benefit from them the most.27 In addition to their instrumental value in improving labour market outcomes, financial incentives for education and training contribute to the broader aims of expanding opportunities, enhancing overall well-being, reducing inequalities and promoting greater social cohesion (OECD, 2017[93]).

Traditional cash transfer programmes can also play a critical role in improving the home learning environment by alleviating the financial pressures that may weight on families. Experimental studies and evaluation of measures taken in several OECD countries confirm that cash transfer programmes have positive effects on the educational outcomes of young children. Furthermore, these effects are most beneficial for the development of the linguistic, cognitive and socio-emotional skills of children with disadvantaged backgrounds (Jones, Milligan and Stabile, 2019[107]; Dahl and Lochner, 2012[108]). Experimental evidence suggests that, by relieving budget constraints and sources of psychological pressure, cash transfers allow families to spend more on nutritious foods, books and toys. This effect is stronger when transfers are accompanied by measures designed to facilitate behavioural change (Premand and Barry, 2022[109]; Macours, Schady and Vakis, 2012[110]) and to provide support to parents.

Individual Learning and Training Accounts (ILAs/ITAs) have been implemented in several OECD countries to facilitate participation by adults in education and training opportunities. ILAs/ITAs are personalised, portable financial accounts or schemes that aim to promote lifelong learning by providing individuals with financial resources to enhance their skills, adapt to changing labour market demands or pursue personal development. ILAs/ITAs are designed to promote skills development and ensure more equitable access to training opportunities. In order to do so effectively, programmes must address several potential challenges. These challenges include (i) bias in participation which may limit enrolment by populations that may benefit the most, such as low-skilled workers, the self-employed and employees in small firms; (ii) limited awareness of the programmes; and (iii) barriers to the access and effective utilisation of funds. Targeting mechanisms can help reduce participation bias and deadweight losses but may also imply associated costs, such as increased administrative complexity and the risk of excluding eligible individuals. Accompanying measures are therefore needed to ensure greater participation among under-represented groups and provide them with appropriate support to overcome the specific challenges they face. Recommended accompanying measures include tailored guidance, information campaigns and mentoring. When designed with these considerations in mind, ILAs/ITAs can foster opportunities by enabling broader and fairer access to education and skills development.28

Anti-discrimination policies and measures

Many OECD countries have promoted broad societal measures to foster diversity and equal opportunities. Structural barriers can prevent individuals from fully developing and making use of their human capital. For instance, while individuals may possess the necessary skills and qualifications, stigma or discrimination attached to particular characteristics may impact negatively on the way in which their abilities are assessed, thereby limiting their capacity to realise opportunities available to them. Full implementation and enforcement of anti-discrimination legislation is necessary to ensure that effort and investment in human capital are properly rewarded, in addition to other economic, social, legal and moral arguments for doing so (OECD, 2025[58]; 2020[111]). However, active engagement from individuals, civil society and the private sector is also needed to foster inclusive societies and workplaces. Many OECD countries encourage diversity in the skills acquisition process through initiatives that reward firms for their commitment to inclusion, such as diversity labels and awards (OECD, 2022[59]; 2016[112]). Financial incentives, including subsidies and tax breaks, are also used to support businesses that hire individuals from diverse or disadvantaged backgrounds. Additionally, public procurement policies increasingly promote supplier diversity. Over the past decade, OECD EU countries have introduced sector- or position-specific quotas, notably benefitting women and people with disabilities.

However, existing diversity policies often overlook socio-economic disadvantage. Research on access to higher education suggests that diversity measures tend to benefit the most privileged within minority groups – for example, those from higher-income families or with greater educational resources – while failing to support the most disadvantaged (OECD, 2020[111]). To ensure a more level playing field, policies must address all forms of disadvantage and ensure that support extends to individuals from lower socio-economic backgrounds regardless of whether they belong to a recognised minority group or not. Moreover, policymakers must consider the risk that targeting specific groups may exclude individuals that do not fit into the criteria used, with the potential effect of undermining support for these measures as well as social cohesion more broadly. Therefore, diversity policies are more likely to be effective if they are part of a comprehensive and inclusive strategy designed to foster opportunities for all members of society.29

4.2.2. Policies for promoting equal opportunities by providing sufficient economic resources

Governments can rely on many different policy instruments to provide individuals with the economic resources they need to realise available opportunities. Tax-benefit policies are widely recognised as a key tool for supporting social mobility, particularly among the middle-class, as confirmed by the evidence in OECD (2018[1]). For instance, adequate income support schemes and family benefits play an important role in protecting individuals and households from the potentially adverse effects of life events (e.g., loss of employment, childbirth, divorce, illness…) which might otherwise result in downward mobility. To shed further light on the issue, this section assesses the impact of taxes and benefits on inequality of opportunity in a broad range of OECD European countries by comparing estimated results from the indicator for market income and disposable income (see Box 4.2). Beyond taxes and benefits, policymakers can rely on a number of other levers to help equip individuals with sufficient economic resources to realise opportunities. This includes well-established policies, such as measures designed to promote financial inclusion or support entrepreneurship and self-employment. Policymakers may also consider several innovative measures that have been pioneered by some OECD countries or have featured in recent policy and public debates. These measures notably include child development accounts, as well as the possible use of wealth and inheritance taxes as means to reduce large gaps in economic resources and limit opportunity hoarding.

Box 4.2. Assessing the role of taxes and benefits in reducing inequality of opportunity

Copy link to Box 4.2. Assessing the role of taxes and benefits in reducing inequality of opportunity

To assess the role of taxes and benefits in reducing inequality of opportunity (IOp – as measured by the indicator developed in Chapter 1), this section proposes to follow the same type of analysis traditionally used to assess the effect of taxes and benefits on income inequality (OECD, 2011[113]; 2008[114]). As described in Annex 1.A, IOp is estimated using an ex ante approach based on regression tree and forest techniques. It reflects the inequality level, as expressed by the Gini index, of a counterfactual distribution of outcomes that only captures differences that are due to a set of selected circumstances (Absolute IOp – see Box 1.4 in Chapter 1).

Following the standard analysis, the overall mitigating effect of taxes and cash benefits on IOp is taken here as the percentage difference between the measure computed for household equivalised market income and for household equivalised disposable income:

$\frac{I O p ({\hat{y}}_{d i s p o s a b l e}) - I O p ({\hat{y}}_{m a r k e t})}{I O p ({\hat{y}}_{m a r k e t})}$

where $I O p ({\hat{y}}_{d i s p o s a b l e})$ and $I O p ({\hat{y}}_{m a r k e t})$ are, respectively, absolute IOp for household equivalised disposable income and for household equivalised market income.

In turn, the mitigating effect of each transfer type is calibrated as the percentage difference between the measure computed for household equivalised disposable income and for household equivalised disposable income excluding that specific transfer:

$\frac{I O p ({\hat{y}}_{d i s p o s a b l e}) - I O p ({\hat{y}}_{d i s p o s a b l e w i t h o u t t a x / t r a n s f e r k})}{I O p ({\hat{y}}_{d i s p o s a b l e w i t h o u t t a x / t r a n s f e r k})}$

The k tax/transfer types covered here are: child benefits; disability benefits; education allowances; housing allowances; social exclusion benefits; old-age benefits; unemployment benefits; and income and wealth taxes.
Disposable income is defined as the sum of income from market sources (i.e., the wage and salary income of the household members, excluding employers’ contributions to social security, but including publicly-funded sick pay, self-employment income, as well as capital and property income streams) and the k tax/transfers above. Negative or nil market incomes are set to 1. In-kind benefits are excluded from the definition of disposable income.
The list of circumstances controlled for using the available data (see Table 1.1 in Chapter 1) comprises: the individual’s sex and country of birth; parental background (education and occupation) when the individual was 14; parents’ country of birth; the household’s homeownership status when the individual was 14; and the degree of urbanisation of the childhood environment.

Tax-benefit policies are expected to have a mitigating effect on IOp, as taxes and transfers affect the current distribution of income and can contribute to correct inequalities in market income that reflect circumstances beyond an individual’s control. The method used here does not allow for analysis of the mitigating effect of current tax-benefit policies on IOp throughout the life cycle. Doing so would require a longer-term perspective, as the influence of early-age circumstances can only be assessed once the current cohort of children enter the labour market and their future outcomes are observed.

Assessing the effect of current taxes and transfers on IOp, as done in this section, is useful nonetheless to shed light on (i) the extent to which circumstances beyond individuals’ control influence the generation of pre- and post-transfers income; and (ii) how effective taxes and cash benefits are in correcting their influence by reaching the populations that are affected by these circumstances and, as far as possible, equalising opportunities for income generation. A similar type of assessment is conducted for the UK tax and transfer system in Groot, van der Linde and Vincent (2019[115]), using a different methodology and data from the British Household Panel Survey over the period 1991-2008.

Tax-benefit policies

Tax and transfer systems play an important role in reducing inequality of opportunity in OECD countries. On average, taxes and transfers are associated with a reduction in inequality of opportunity of 25% in OECD countries in 2019, but with significant cross-country variation (see Figure 4.6). These results suggest that taxes and transfers play an important role in compensating for the effect on market income of circumstances such as individual characteristics, parental socio-economic background and childhood environment. For example, in Belgium, Denmark and Ireland, the measured level of inequality of opportunity is reduced by over 35% following taxes and transfers. By contrast, the tax and transfer system has less impact on inequality of opportunity in countries such as Hungary, Latvia and Switzerland, where the observed mitigating effect is of 10% or less. Furthermore, there is a high level of correlation between the mitigating effect of tax and benefit systems on inequality of opportunity and on income inequality, with a cross-country correlation of 80%. In this respect, the analysis suggests that more redistributive tax-benefit systems may also be more effective in reducing inequality of opportunity.30

Tax-benefit policies differ in terms of the associated mitigating effect on inequality of opportunity, with significant variation between types of taxes and transfers and across countries. The observed effectiveness of specific types of taxes and transfers in reducing inequality of opportunity31 varies significantly across countries, underlining the importance of proper design, targeting and generosity-level of benefits.32 Furthermore, the impact of specific tax-benefit policies (including unemployment benefits, education allowances and income taxes) on inequality of opportunity and on income inequality are strongly correlated (see Table 4.1 below).

Figure 4.6. Taxes and transfers contribute to reduce inequality of opportunity in OECD European countries, though to varying degrees
Copy link to Figure 4.6. Taxes and transfers contribute to reduce inequality of opportunity in OECD European countries, though to varying degrees

Absolute inequality of opportunity in household disposable and in market income and mitigating effect of transfers in reducing inequality of opportunity, by country, individuals aged 25-59, 2019

	Mitigating effect on inequality of opportunity	Correlation with the mitigating effect on income inequality
Child benefits	-3%	0.47
Disability benefits	-6%	0.49
Education allowances	-1%	0.87
Housing allowances	-1%	0.62
Old-age benefits	-3%	0.36
Social exclusion benefits	-2%	0.61
Unemployment benefits	-4%	0.91
Income and wealth taxes	-12%	0.84

Note: The mitigating effect of each tax/transfer is calculated as the reduction in inequality of opportunity (or inequality of outcomes) resulting from the inclusion of that tax or transfer, relative to the level of inequality of opportunity (or inequality of outcomes) observed without it. For more detail on the calculation of the mitigating effect of taxes and transfers, see Box 4.2. The sample is restricted to individuals aged 25 to 59 and covers the OECD countries shown in Figure 4.6. The mitigating effects on inequality of opportunity are calculated as the average across the OECD countries in the sample. Child benefits refer to benefits that provide financial support to households for bringing up children, as well as benefits that provide financial assistance to people who support relatives other than children. Disability benefits refer to benefits that provide an income to persons below the standard retirement age whose ability to work and earn is impaired beyond a minimum level laid down by legislation by a physical or mental disability. Education allowances refer to grants, scholarships and other assistance for education that is received by students. Housing allowances refer to means-tested transfers granted by a public authority to tenants and owner-occupiers to alleviate housing costs. Social exclusion benefits refer to income support (regardless of its duration) and other cash benefits for people with insufficient resources. Old-age benefits cover benefits that provide a replacement income when the person retires from the labour market or that guarantee a certain income when a person has reached a prescribed age. They also include survivors’ benefits – i.e., benefits that provide temporary or permanent income to people below retirement age who have lost a spouse, partner, or close relative who was usually their main breadwinner. Unemployment benefits replace, in whole or in part, income lost by a worker who loses their job or retires early due to employer downsizing. They also cover benefits that help with training or re-training, or with travel and relocation costs for jobseekers. Income and wealth taxes include taxes on taxes on income, profits and capital gains, as well as regular taxes on net wealth. They also include social insurance contributions.

Source: OECD calculations based on the European Union Statistics on Income and Living Conditions (EU-SILC), https://ec.europa.eu/eurostat/web/microdata/european-union-statistics-on-income-and-living-conditions.

Several lessons can be drawn by looking at tax and transfer policies individually and assessing their respective correlation with inequality of opportunity. First of all, income and wealth taxes seem to play a crucial role in ensuring a more level playing field. Well-designed progressive tax schemes contribute to reduce inequality of opportunity in most countries, as reflected by the lesser influence of circumstances on disposable income compared to market income. On average across the OECD European countries covered, the share of income inequality attributable to circumstances beyond individuals’ control is lower by 12% following income and wealth taxes. In countries such as Belgium, Ireland, Portugal and Sweden, that share rises to over 20% (see Figure 4.7, Panel A). This strong mitigating effect is likely related to the fact that income and wealth taxes tend to be progressive and are primarily paid by households that are less affected by disadvantageous circumstances.

Unemployment benefits are associated with a reduction in inequality of opportunity of 4% on average. This effect is twice as strong or more in countries such as Austria, Finland and Sweden, and particularly pronounced in the case of Denmark, where unemployment benefits reduce inequality of opportunity by over 20% (see Figure 4.7, Panel B). Again, the strength of the associated impact on inequality of opportunity may be due to composition effects and targeting, with individuals facing disadvantageous circumstances benefitting more from unemployment benefits. By contrast, the associated impact appears to be lower in Eastern Europe and in some Southern European countries. This may also partly reflect the differing composition of the labour force in these countries. Women and individuals from disadvantaged backgrounds may, for instance, be more likely to encounter high initial barriers to entry on the labour market, leading to higher rates of inactivity for these populations and ineligibility for unemployment benefits.33 Previous studies have found that other policy-amenable features of the labour market can influence inequality of opportunity. For example, a lower unemployment benefit replacement rate is correlated with higher inequality of opportunity and high trade union density is associated with low inequality of opportunity. It remains difficult however to establish a direct causal link between these variables (Checchi, Peragine and Serlenga, 2016[116]).

In addition to “unemployment benefits, evidence suggests that well-designed active labour market policies may also contribute to reduce inequality of opportunity. Active labour market policies (ALMPs) are measures that provide employment services designed to motivate jobseekers, improve skills, help employers meet their skill needs and create employment opportunities (e.g., job-search assistance, hiring subsidies, training, public sector employment programmes...). These measures are generally targeted at groups that are vulnerable on the labour market (i.e., jobseekers and those at-risk of job loss) and more likely to have faced disadvantageous circumstances such as low parental education, migrant parentage or residence in deprived areas. These groups include discouraged workers and other inactive individuals who are willing and able to work, people in low-paid jobs and at risk of job loss, as well as those who are at or beyond pension age and wish to continue working. Overall, the evidence on the effectiveness of ALMPs in promoting employment for disadvantaged jobseekers is mixed. Not all AMLPs are equally effective and, even when they do help people into work, additional support may be needed to ensure they remain in work and experience career progression (OECD/European Commission, 2025[117]; Martin, 2015[118]; Martin and Grubb, 2001[119]). Well-designed and targeted ALMPs can however be effective in promoting employment for disadvantaged workers, as highlighted for example by recent evidence from Greece, Ireland and Lithuania (OECD, 2024[120]; 2022[121]; OECD/Department of Social Protection, Ireland/EC-JRC, 2024[122]).

Disability benefits are associated with a 6% reduction in inequality of opportunity on average. While the effect of social exclusion benefits is smaller at 2%, it remains important in some countries. Disability benefits have a strong effect in Belgium, Denmark, Estonia, Ireland, Norway and the Slovak Republic, where they are associated with a reduction in inequality of opportunity of over 10% (see Figure 4.7, Panel C). Challenges relating to fiscal cost and the motivational aspects of these benefits need to be carefully considered (Hemmings and Prinz, 2020[123]). Social exclusion benefits are strongly correlated with a reduction in inequality of opportunity in some countries but not in others. In the Netherlands, Norway and Sweden, for example, their mitigating effect is substantial and amounts to over 5% (see Figure 4.7, Panel D). This likely reflects the fact that these types of benefits are targeted by design at groups that face disadvantageous circumstances, such as single-parent households, individual with low-income or migrant parentage and households residing in rural areas or in rental housing.

It is important to bear in mind that social exclusion benefits differ across countries in terms of their key design features. This notably includes how they balance the objective of poverty alleviation with challenges relating to fiscal cost and with the motivational aspects of these benefits such as potential work disincentives (Immervoll, 2010[124]). A number of countries combine low generosity with low benefit withdrawal rates, thereby prioritising employment incentives over the objective of poverty alleviation (Coady et al., 2021[125]).The evaluation of social exclusion benefits often covers both their effectiveness in alleviating poverty and their impact on a range of other outcomes that contribute to enhance individuals’ opportunities, such as health and education. The measure of inequality of opportunity introduced in this report and the type of analysis conducted in this section can further support the monitoring and evaluation of social exclusion and disability transfers. Their contribution consists in helping quantify the impact of these transfers on the opportunities of individuals in disadvantaged circumstances.

Child benefits are associated with a reduction of inequality of opportunity of 3% on average, again with significant variation across countries. In countries such as Finland and Ireland, child benefits are correlated with a reduction in inequality of opportunity of over 10% (see Figure 4.7, Panel E). Similarly, while, on average, education allowances are only weakly correlated with a reduction in inequality of opportunity, they have a much stronger effect in some countries. For instance, the association rises to around 12% in Denmark (see Figure 4.7, Panel F). Child benefits remain an important tool for promoting opportunities. Around half of OECD countries offer universal child benefits, with others providing fully means-tested or partially-targeted benefits based on income.34 Evidence suggests that additional expenditure on children has a large and lasting impact on their development and well-being, with the effect particularly strong for children from lower-income households (OECD, 2019[81]; McEwen and Stewart, 2014[126]). Child benefits are effective in providing income support to disadvantaged families and can help promote social mobility, particularly when they are targeted towards low-income families (OECD, 2018[1]). In doing so, these benefits play an important role in helping compensate for early-life disadvantage and mitigate its effects throughout the lifecycle.

Figure 4.7. Income and wealth taxes have the largest effect on inequality of opportunity, ahead of disability, unemployment and child benefits
Copy link to Figure 4.7. Income and wealth taxes have the largest effect on inequality of opportunity, ahead of disability, unemployment and child benefits

Percentage reduction in IOp (x-axis) and in income inequality (y-axis), by tax/transfer type and country, 2019

The motivational aspects of taxes and benefits must also be taken into account and properly managed to promote equal opportunity. The impact of tax and benefit schemes on the behaviour and motivation of recipients should also be considered and evaluated, notably in the case of policies aimed at increasing activation and labour market participation. The OECD’s Faces of Joblessness project provides a detailed and people-centred approach to the specific barriers to employment encountered at country-level, including behavioural barriers, as well as recommendations for overcoming them. For example, in a recent study of Switzerland, lack of recent work experience and substantial non-labour or partner income are identified as key barriers (Georgieff, 2024[127]). Partner income is a barrier in particular for women and may help explain why a significant share of women leave stable employment at childbearing age, alongside low supply and high cost of early childhood education and care programmes. In turn, high marginal taxation of second earners’ incomes is likely to contribute to the unequal division of earnings between main earners and their partners. At the institutional level, policy coherence and coordination are identified as essential conditions for unlocking sources of employment growth.

To sum up, different benefits can be used in combination to reduce inequality of opportunity effectively and ensure a more level playing field. Countries with highly redistributive systems also tend to have tax-benefit systems that are more effective in reducing the impact of circumstances beyond individuals’ control on their outcomes.35 Although this report focuses mainly on inequality of opportunities as measured by market income (see Chapter 2), the analysis in the present section suggests that tax-transfer policies may also provide tools to counterbalance the effects of disadvantageous circumstances on people’s access to paid employment opportunities.36 Post-market redistributive policies should therefore be seen as necessary but non-sufficient tools for addressing inequality of opportunity that can be used in complement to in-market policies. In this perspective, eliminating occupational barriers to labour market entry and increasing access for disadvantaged individuals, as recommended in OECD (2018[1]), constitutes the first step towards ensuring a more level playing field where everyone has a fair chance to realise the economic opportunities available to them and outcomes are not predominantly determined by circumstances beyond individuals’ control.

Capital and inheritance taxation

Large inequality in wealth tends to give rise to forms of concentration and deprivation that undermine equal opportunity, economic growth and social cohesion. Wealth matters significantly for the material well-being of individuals and households. Savings can help weather unexpected income shocks, smooth consumption over the life cycle and manage risks. Assets can generate capital income or serve as collateral to secure credit, purchase durable or capital goods and invest in high-yield financial instruments (Balestra, Caisl and Hermida, 2025[20]; Balestra and Oehler, 2023[128]). As highlighted in OECD (2018[1]), the uneven distribution of wealth contributes to the transmission of advantage and disadvantage and constitutes an important barrier to social mobility. A lack of wealth can lead to “sticky floors” at the bottom of the distribution, preventing people from participating fully in the economy and realising available opportunities. At the aggregate level, this limits the overall potential pool of talent and dampens the innovation and entrepreneurship that drive long-term economic growth. Similarly, excessive concentration of wealth at the top of the distribution can lead to the emergence of “sticky ceilings”. In these contexts, access to resources and opportunities are more likely to be determined by family background and inherited circumstances rather than by personal agency and effort. This in turn may undermine public perceptions of fairness, expectations of upward mobility and overall social cohesion.37 Inheritance and lifetime transfers of wealth, including inter vivos gifts, play a crucial role in the dynamics of wealth accumulation and the effective taxation of these transfers has been identified as an important lever for promoting opportunities and social mobility (OECD, 2018, pp. 318-319[1]). This section explores some of the benefits and challenges associated with these forms of taxation in terms of their possible contribution to promoting equal opportunity.

Several tax reforms have been proposed as a means to address excessive gaps in wealth, including wealth and inheritance taxes or a tax on lifetime wealth transfers. Several proposals have been made to use inheritance taxation to address inequality of opportunity (Piketty, Saez and Zucman, 2023[129]; Morelli and Granaglia, 2022[130]). While the specifics of these proposals vary, they generally underline the advantages that inheritance taxation presents over other taxes in terms of efficiency, equity and administrative costs (see Box 4.3 for a short review of the theory and evidence on this issue). The OECD has also analysed countries’ experience with inheritance taxation and the role it can play in promoting equal opportunity. In doing so, it has identified effective ways to improve the efficiency and equity of inheritance taxation. This notably includes making the inheritance tax recipient-based, exempting small inheritances and maintaining broad tax bases (OECD, 2021[75]).

Box 4.3. Theory and evidence on the efficiency of inheritance taxation

Copy link to Box 4.3. Theory and evidence on the efficiency of inheritance taxation

How does inheritance taxation affect savings and labour market incentives?

Overall, the empirical literature suggests that inheritance taxation can be expected to:

Reduce savings incentives for donors, though evidence also suggests that inheritance taxation may lead to increased charitable giving by donors, motivated in part by the preferential tax treatment generally applied to charitable giving (OECD, 2021[75]; Bakija and Gale, 2003[131]).
Increase savings incentives and labour market participation for heirs, with (i) evidence of a positive impact on labour supply in Germany, Sweden and the United States, as inheritance receipts tend to reduce incentives to work via the income effect (OECD, 2021[75]); and (ii) some studies finding that inheritance taxation also encourages potential heirs to save more (Akgun, Cournède and Fournier, 2017[132]).

Unless they are properly designed, inheritance taxes may also negatively affect entrepreneurship by heirs and family business successions (Tsoutsoura, 2015[133]). Inheritance taxes influence the decision to sell or retain a firm within the family following the death of the business owner and heirs may not always have sufficient liquid assets to pay the tax. Allowing generous business asset relief under inheritance and estate taxes or the option to defer payment until the asset is sold can help address the issues created by these specific liquidity pressures. However, counter-arguments have been made based on evidence of the underperformance of businesses managed by heirs (Bennedsen et al., 2007[134]; Pérez-González, 2006[135]). In this perspective, inheritance taxation would also contribute to enhance overall efficiency by reducing skills-capital mismatches.

It should be noted furthermore that, while the effects discussed above are important, the overall impact and efficiency of inheritance taxation depends on a much wider range of behavioural responses (see the main text below).

Is inheritance taxation efficient in terms of administrative costs?

While inheritance taxation does involve significant administrative costs, it presents a number of relative advantages in this respect compared to wealth taxation (OECD, 2021[75]; 2018[136]). For example, inheritance taxes are only levied once, as opposed to annually in the case of most taxes on wealth, which helps mitigate key challenges such as the need for annual valuations. Inheritance taxes are also levied at a time when the tax administration can observe inherited assets more easily and when these assets may need to be valued anyway (OECD, 2021[75]). Furthermore, progress on international tax transparency is also contributing to enhance countries’ ability to tax capital effectively (OECD, 2024[137]).

What does the theory and evidence suggest in terms of the design of inheritance taxes?

From a theoretical perspective, optimal tax models do not provide clear recommendations on the design of inheritance taxes (OECD, 2021[75]). The results drawn from these models vary significantly, depending on their assumptions. While some models suggest that bequests should not be taxed, others recommend that they be subsidised and others still find optimal tax rates to be positive.

If ensuring a more level playing field is the main objective of inheritance taxation, there is a strong case to be made in favour of a recipient-based inheritance tax rather than an estate tax levied on donors. From the perspective of reducing gaps in opportunities, it is the amount of wealth received by each recipient that should matter most rather than the overall amount bequeathed by the donor (OECD, 2021[75]; Adam et al., 2011[138]). Furthermore, a recipient-based inheritance tax encourages the division of estates and may contribute thereby to reduce excessive concentrations of wealth.

In this same perspective, avoiding the taxation of small inheritances may have an equalising effect, at least in the short run. A tax exemption threshold that allows small inheritances to be passed on free of tax, combined with a progressive inheritance tax rate schedule, may reduce absolute and relative levels of inequality in wealth and opportunities.

Countries’ experience with inheritance taxation underlines several important challenges. A first issue concerns the size of the revenue raised. By taxing high-value transfers, inheritance taxation can enhance equality of opportunity and reduce the concentration of wealth. However, introducing and implementing inheritance taxation has proven consistently difficult across countries. First, while taxes on wealth transfers – including inheritance, estate and gift taxes – are levied in around two-thirds of OECD countries, they play a limited role in terms of overall revenue raised. In 2018, these taxes contributed around 0.5% of total tax revenue on average for the countries that levied them, exceeding 1% of total revenue in only four OECD countries (Belgium, France, Japan, and Korea) (OECD, 2021[75]). These low levels reflect narrow tax bases due to preferential tax treatment for transfers to close relatives, relief provided for specific assets (e.g., main residence, business and farm assets, pension assets and life insurance policies) and tax planning through inter vivos gifts (OECD, 2021[75]; Fize, Grimprel and Landais, 2022[139]).38 Overall, while some countries have abolished inheritance taxes, the level of revenue raised through this form of taxation has been rising in other countries due in part to the ageing profile of populations.39

Second, behavioural responses create uncertainty and may undermine the effectiveness of inheritance taxation if they are strong enough. The outcomes of inheritance taxation depend on how it affects a wide range of behaviours, in addition to those already covered in Box 4.3. The empirical literature has notably studied the impact of inheritance taxation on wealth accumulation and residential choice, on tax planning and avoidance, and on inter vivos transfers. While many existing studies find that behavioural responses to inheritance taxation tend to be modest overall and considerable gaps in research remain, there is some evidence suggesting that particular groups may react strongly to the introduction of inheritances taxes and changes in their rates, rules or thresholds. This is notably the case for older individuals and for the very wealthy (Schratzenstaller, 2025[140]). The evidence on inheritance tax planning shows that there is significant use of inter vivos gifts as a form of wealth transfer when these transfers benefit from more favourable tax treatment. Moreover, tax relief, tax planning and tax evasion opportunities tend to mostly benefit wealthy individuals. As such, they have contributed to lower the overall tax burden on the very wealthy in some countries, in addition to significantly reducing potential revenue and generating distortions (OECD, 2021[75]). Conversely, there is little evidence of international migration by the wealthy in response to inheritance taxation. However, higher sensitivity at the very top of the distribution may increase within-country mobility where taxation differs across states or regions, as is the case for example in Spain and the United States.40

Finally, public acceptability constitutes an important constraint for inheritance taxation. Inheritance and estate taxes are also difficult to implement because they tend to be unpopular with the general public (OECD, 2021[75]; Goss, 2024[141]). Here, public views may need to be studied and “unpacked” in greater detail. While the taxation of modest inheritances tends to be universally unpopular, available studies suggest that there is strong demand for policy action to reduce inequality of opportunity and that individuals are willing to support higher tax rates on inherited wealth than on self-made wealth (OECD, 2023[142]; Fisman et al., 2020[143]). This should in theory create scope for introducing taxation on large inheritances. Several studies have argued on this basis that providing information about the importance of inherited wealth and its impact on opportunities, as well as correcting misperceptions regarding the extent of inheritance tax exemptions, could contribute to increase public support for inheritance taxation.41 Evidence from a number of countries including Germany, Sweden and the United States indicates that this may be the case, at least in experimental settings (Bellani et al., 2024[144]; Bastani and Waldenström, 2021[145]; Stantcheva, 2021[146]).42

On balance, while inheritance taxation can be an important tool for ensuring a more level playing field, it should not be seen as a silver bullet. Better design and more effective reform strategies can help improve inheritance taxes and address some of the barriers to implementation, including those relating to public acceptability (OECD, 2025[76]; 2021, pp. 128-130[75]; Fize, Grimprel and Landais, 2022[139]). However, even well-designed inheritance, estate and gift taxes are likely to remain relatively limited sources of revenue compared to other sources of taxation including labour, income and consumption.

Child Development Accounts

Proposals have been made to provide every young adult with a capital endowment enabling them to pursue and realise opportunities. Atkinson (2015[147]) constitutes a notable example of this type of proposal. Atkinson makes the argument for a universal endowment designed to ensure that all citizens begin their adult lives with a minimum level of financial security and opportunity. A capital endowment of this kind would help ensure a more level playing field by mitigating the disadvantages faced by individuals from less affluent backgrounds who may lack the financial resources to invest in their human capital and realise the economic opportunities available to them.43 This section discusses a specific type of measure – child development accounts (CDAs) – that has been put forward and implemented in a number of OECD countries as a possible option for achieving this objective. In this perspective, CDAs are designed to promote opportunities by providing a minimum endowment for all citizens at adulthood, supporting the accumulation of wealth by individuals from disadvantaged backgrounds and incentivising saving and investment.

Child development accounts (CDAs), also known as “baby bonds”, are government-issued savings accounts or trusts established for children at birth. The purpose of these accounts is to provide all children with an initial “seed” deposit to be invested in their future education and long-term development (Brown et al., 2023[148]). As such, CDAs are meant to support investment in human capital and promote economic opportunities for children from disadvantaged backgrounds. They are also viewed as measures that contribute to reduce wealth inequality by encouraging saving behaviour and asset-building among low-income families (Huang et al., 2021[149]). Several OECD countries have active CDA policies, including Canada, Hungary, Israel, Korea and the United States. Annex 4.A offers an overview of the main CDA programmes in OECD countries (Annex Table 4.A.1), at sub-national level in the United States (Annex Table 4.A.2) and in non-OECD countries (Annex Table 4.A.3).44

Universal eligibility, automatic enrolment and a publicly-funded initial deposit are common features that help ensure CDA programmes are inclusive and efficient. In OECD countries, CDA programmes tend to be universal and typically extend to all children with no specific eligibility requirement other than citizenship or residency.45 In the case of Israel’s ongoing Saving for Every Child Programme (SECP) and of the United Kingdom’s Child Trust Fund (CTF) which ran over the period 2005-2011, universal eligibility was combined with automatic enrolment for all newborns, with the accounts being opened by the institutions responsible for the programme. Automatic enrolment is designed to ensure that minorities and disadvantaged groups are effectively covered, such as for example Arab Israelis and Haredi Jews in the case of the SECP (Grinstein-Weiss et al., 2019[150]). Starting the programme at birth also improves its economic efficiency by allowing more time for the asset to accumulate. In most cases, CDAs include an initial government deposit designed to help “kickstart” the account.46 While the initial deposits are usually modest, they can nevertheless be effective in this role, especially if the CDA is opened at birth and small contributions are made over time (Beverly, Elliott and Sherraden, 2013[151]). Most CDA programmes also allow for matching or complementary private contributions to the account, though these are often capped or restricted to avoid deepening inequalities in wealth and opportunities. In most cases, CDAs are funded through public expenditure and can be expensive, which limits their potential for expansion. For instance, the cost of the United Kingdom’s CTF is estimated at around GBP 2 billion in total over the lifetime of the programme (McKay, Tian and Lymer, 2024[152]).

Available evidence suggests that CDAs can have a positive impact on the financial outcomes of disadvantaged children and families. Empirical assessments of the effectiveness of CDAs have been limited given the recency and long-term nature of these policy tools. Most of the existing evidence on CDAs has come from studies of the now-discontinued CTF in the United Kingdom and of pilot initiatives, notably in the United States (see Box 4.4). Birkenmaier, Kim and Maynard (2023[153]) provides a recent review of the evidence from randomised and quasi-experimental studies on the financial outcomes of participants in CDA programmes. Where available, these studies highlight the financial benefits associated with CDAs. CDAs tend to have a small but positive impact on asset-building, though they do not significantly alter family saving behaviour.47 Furthermore, children and parents participating in CDA programmes also benefitted from greater exposure to financial institutions and services. In the case of the Michigan MI-SEED programme, participation was shown to have a small but statistically significant positive impact on financial skills – including savings and budgeting – and access to financial products for both children and parents from disadvantaged backgrounds (Birkenmaier, Kim and Maynard, 2023[153]).48

CDAs may also benefit children and families through important non-financial channels. CDAs have been shown to improve the academic performance of participating children and foster positive attitudes towards higher education. This notably translates into increased enrolment rates in post-secondary education, in particular for male participants from disadvantaged backgrounds (Grinstein-Weiss et al., 2019[150]; Frenette, 2017[154]). There is also evidence of positive effects on the family environment, including improved mental health outcomes for parents (notably reduced levels of maternal depression) and enhanced social-emotional development for children from disadvantaged backgrounds (Huang, Sherraden and Purnell, 2014[155]). In some cases, improved intergenerational communication and family bonding have been shown to play an important role in the programmes’ success, as children and parents supported and encouraged each other throughout the asset accumulation process (Deng, 2019[156]).

Lessons from countries’ experience with CDAs suggest that several key design features can improve their effectiveness. First of all, restrictions on the use and withdrawal of funds can help ensure that CDAs achieve their objectives in terms of educational or personal development and asset building. Typically, the funds cannot be withdrawn before a specific age and can only be allocated for specific purposes.49 Targeted awareness and information campaigns, as well as financial education resources, can help increase understanding of the benefits of CDAs, facilitate engagement with the financial products and services proposed and improve decisions about the investment strategy selected and use of the funds once they are withdrawn. This type of support is particularly important for low-income households, who tend to encounter additional barriers to enrolment and asset accumulation due to administrative burden, resource and time constraints as well as limited financial literacy. In order to be effective, information and support should be provided to children and to parents.50 Similarly, targeted measures can be considered to ensure CDAs contribute to greater financial equity. This can include, for example, the allocation of larger public deposits or higher-value vouchers to the accounts of children from disadvantaged backgrounds. Finally, CDA funds should be excluded from the calculation of household assets when determining eligibility for means-tested benefits, as including them would undermine the policy's objectives (Markoff, Radcliffe and Hamilton, 2024[157]; Sherraden et al., 2018[158]). Similarly, ensuring that CDA funds are not taxed, even after they are withdrawn, can help increase participation rates and prevent penalties for those who participate in the programme (Sherraden et al., 2018[158]).

Box 4.4. CDA initiatives at the sub-national level: Examples from the United States

Copy link to Box 4.4. CDA initiatives at the sub-national level: Examples from the United States

In the United States, the One Big Beautiful Bill Act (OBBB), which was passed by the 119th Congress and signed into law in July 2025, provides for the creation of a tax-favoured federal child savings account programme. This follows several similar attempts to introduce federal legislation on CDA, including the American Opportunity Accounts Act (AOAA) proposed during the previous 118th Congress. In addition to these federal initiatives, the US also has established experience with CDA at sub-national level.

Several US states, districts and cities have adopted CDA policies, including Connecticut and the District of Columbia (DC). Other states, such as California, have approved CDA programmes, appropriated state funding and are in the process of finalising conditions for eligibility and restrictions (see the California HOPE for Children Trust Account Program: https://www.treasurer.ca.gov/hope/). This box examines selected key features of the CDA programmes in the state of Connecticut, the District of Columbia, and in the cities of Oakland (CA) and St. Louis (MO). An overview of these initiatives can be found in Annex Table 4.A.2.

All of these programmes include automatic enrolment and an initial deposit. However, Connecticut and the District of Columbia have introduced innovative additional elements. For instance, Connecticut’s CT Baby Bonds programme and the District of Columbia’s Child Trust Fund do not allow for family contributions. This reflects a specific goal and feature of these programmes: they are designed to contribute to asset accumulation by adulthood for all children and in a uniform way. In DC, the local government also makes annual deposits into each account, with the amount varying based on the family’s income (Brown et al., 2023[148]). This income-sensitive approach acknowledges the additional challenges faced by lower-income households in saving for their children (Markoff, Radcliffe and Hamilton, 2024[157]). Moreover, all programmes offer financial literacy courses for parents. In Connecticut, for example, attending a financial literacy course is mandatory before withdrawing funds, to ensure that beneficiaries are in a position to make well-informed decisions. Oakland’s Brilliant Kids programme also provides parents and guardians with training to strengthen their financial skills.

To increase engagement, St. Louis’ College Kids programme offers rewards of up to USD 500 to encourage parents to save in their child’s account. Parents can earn USD 30 for each year the child attends school and the first USD 100 deposited into the child’s account are matched by the Treasurer’s Office (St Louis Office of Financial Empowerment, 2024[159]). These incentives are effective in promoting active parental involvement. Furthermore, unlike other programmes, the accumulated funds in the College Kids programme are excluded from the household’s asset calculations for means-tested benefits, ensuring that the family's eligibility for public assistance remains unaffected (St Louis Office of Financial Empowerment, 2024[159]).

Financial Inclusion

Limited financial inclusion remains a significant barrier to wealth accumulation and access to economic opportunities for many groups. Women tend to have lower access to credit and financial resources and to face a higher risk of economic insecurity (OECD, 2023[16]). This contributes to limit their capacity to accumulate wealth and realise economic opportunities, including entrepreneurship and business creation (see the following section). On average across the OECD, single men hold approximately USD 43 000 (around EUR 37 000) more wealth than single women, with large gender wealth gaps recorded in a third of countries. Wealth gaps between native and migrant populations are even larger. On average across 20 OECD countries with available data, migrant households hold USD 136 000 (EUR 118 000) less net wealth than native-born households, even after controlling for factors such as age, education and number of adults in the household (Balestra, Caisl and Hermida, 2025[20]). Women are also less likely to start or manage new businesses across the OECD (OECD, 2023[160]; OECD/European Commission, 2023[161]). Similarly, migrant parentage may reduce access to credit and business creation in some countries. For example, in two‑thirds of OECD countries, migrant entrepreneurs are more likely than native‑born ones to be own-account self-employed and this gap is neither explained by individual characteristics, such as education level, nor by the sector of activity (OECD, 2024, pp. 121-165[162]).

Several financial inclusion policies have been shown to be effective in promoting household wealth accumulation and in helping support historically disadvantaged groups. Measures that aim to promote financial inclusion can also provide opportunities for wealth accumulation by increasing household savings, improving financial literacy and facilitating access to financial advice. Various government-backed saving schemes are designed to help households build their financial buffers, as detailed in (OECD, 2023[16]).51 These schemes notably include tax incentives (such as removing tax on the interest earned on savings); matching people’s savings; index-linked bonds or guaranteed minimum interest rates; and prize-linked savings accounts, whereby higher interest rates, cash prizes or in-kind benefits are randomly distributed to savers.52

Savings and matching schemes have been widely implemented in OECD countries, with scope to improve the targeting of savings incentives. Matching schemes are more effective if they are tailored to household circumstances, for example by linking contribution rates and thresholds to individual income and restricting eligibility to low-income households. Atkinson (2015[147]) has proposed inflation-indexed savings certificates for small savers based on examples from several countries, including Ireland, the United States and the United Kingdom’s Granny Bonds which were limited to people over retirement age. This targeted approach can contribute to attract more low-income participants and enhance the schemes’ progressivity (Azzolini, McKernan and Martinchek, 2020[163]). The United Kingdom's Help to Save scheme, for instance, is accessible only to individuals receiving social benefits, such as the Working Tax Credit, Child Tax Credit or Universal Credit. Similarly, Canada’s Learn$ave pilot programme combined a matched savings account with case management services and financial literacy training, enhancing its effectiveness for lower-income participants (Leckie et al., 2010[164]). At sub-national level, US states have implemented a variety of Individual Development Accounts (IDAs) to help low-to-moderate-income individuals accumulate savings, increase financial literacy and invest in long-term assets such as homes, businesses and education (Sherraden, 2000[165]).

Long-term savings and investment initiatives can target specific groups and improve their financial security. Olsen and Whitman (2011[166]) provides an overview of several long-term savings and investment initiatives targeted at minority populations and women in the United States. Similarly, Postmus, Hetling and Höge (2015[167]) and Sanders, Weaver and Schnabel (2007[168]) examine programmes that are developed specifically for victims of violence against women. These studies underline the importance of high-quality financial education, information and guidance to help vulnerable individuals better plan for their future financial needs. Key characteristics of effective initiatives include delivery in the workplace and integration with opportunities and incentives to save, such as IDAs, as discussed above.

Finally, access to high-quality financial advice and improved financial literacy constitute important levers for providing economic opportunities to low-income households. Vulnerable households may face resource constraints or lack sufficient financial knowledge to seek out effective support (Lusardi, Michaud and Mitchell, 2017[169]). Although recent regulatory changes have sought to lower financial advisory fees, reduce conflicts of interest (e.g., commission-based advice) and encourage digital advisory options (OECD, 2022[170]), the cost of financial services remains prohibitive for many low-income households. As a result, these households are less likely to use advisory services for financial planning or investments (Burke and Hung, 2021[171]). To address this gap, targeted financial support, such as rebates for those with low incomes or limited wealth, could significantly expand access to financial advice, which is particularly vital for managing debt and building financial stability (Krishnamurti et al., 2022[172]).

Support for entrepreneurship

Policies designed to support and encourage “missing entrepreneurs” among underrepresented groups can help promote greater opportunities and economic dynamism. Different populations often face specific barriers to business creation and growth. In the case of women, these barriers and the resulting gender gaps in entrepreneurship are well documented. For example, if women participated in early-stage entrepreneurship at the same rate as men aged 30 to 49, there would be an additional 24.8 million women entrepreneurs across the OECD. Furthermore, women entrepreneurs are less likely to benefit from international trade. According to a survey of firms in OECD countries with a presence on Facebook, in 2022 only 11% of women-led small and medium enterprises (SMEs) exported, compared to 19% of SMEs led by men. The potential gains from closing these gaps are substantial, both for individuals and for the economy as a whole. Recent estimates from Canada and the United Kingdom suggest these gains could translate into an increase of around 6% to 12% of GDP if women were as active as men in starting and growing businesses (OECD/European Commission, 2023[161]).

Motivation and education are primary barriers that must be addressed in order to foster an entrepreneurial mindset and culture. Aspiration levels tend to be lower among women entrepreneurs and contribute to widen gender gaps in business creation and growth. Over the period 2018 to 2022, only 11% of women entrepreneurs in the OECD reported that they expect their business to create at least 19 jobs over the next five years, compared to 16% of men. Women are also 25% less likely than men to report that they have the skills and knowledge needed to start a business and their entrepreneurial networks are typically smaller and more informal than those of men (OECD/European Commission, 2023[161]). As a result, support measures should also focus on building human capital and enabling social infrastructure.

Access to finance constitutes an important additional barrier. Women are generally less likely to successfully secure debt and equity financing than men and, when they do, they typically receive less funding, pay higher interest rates and are required to provide more collateral (Guzman and Kacperczyk, 2019[173]; Lassébie et al., 2019[174]; Thébaud and Sharkey, 2016[175]). The OECD has highlighted a growing range of effective policies for narrowing the gender gap in entrepreneurial finance and promoting opportunities for female entrepreneurship (OECD/European Commission, 2023[161]; 2021[176]). Traditional policy responses include loan guarantees, grants and investor readiness training. For instance, government-backed loan guarantees for women-owned businesses can reduce the perceived risk for financial institutions. Beyond these measures, governments can explore additional approaches to address specific barriers for women entrepreneurs on financial markets. These approaches are aimed both at the supply-side (e.g., under-representation of female decision makers and mismatch of financial products and services) and at the demand-side (e.g., low levels of financial literacy). In this respect, increased access to finance through microfinance, fintech and direct investment can play a significant role in promoting greater entrepreneurship among women (see Box 4.5).

Box 4.5. The role of microfinance and fintech in enhancing access to credit for female entrepreneurs

Copy link to Box 4.5. The role of microfinance and fintech in enhancing access to credit for female entrepreneurs

Microloans can be valuable tools for supporting female entrepreneurs

Microloans, often provided without collateral, are especially valuable for female entrepreneurs. Three additional measures can further increase their effectiveness (OECD, 2023[160]).

First, strengthening microfinance markets can help meet the high demand for microloans, especially in the EU, where the gap is expected to reach EUR 17 billion by 2027 (Drexler et al., 2020[177]).
Second, increasing guarantees for microfinance agencies can encourage more lending by these institutions and attract new entrants into the microfinance market (OECD/European Commission, 2021[176]). This action can be complemented by providing funds for microfinance with more favourable conditions (e.g., longer term maturities) and offering relief to microfinance agencies by deferring non-critical supervisory processes.
Third, bundling microloans with non-financial services such as training and coaching to improve business performance can increase rates of microloan repayment. Evaluations show that these non-financial services are effective (OECD/European Commission, 2021[176]), though many offerings are relatively basic and less commonly provided by microfinance institutions in some countries, such as for example in Eastern Europe (Drexler et al., 2020[177]; Diriker, Landoni and Benaglio, 2018[178]). These services often have a large positive impact for women entrepreneurs who tend to face greater skills gaps and may lack sufficient access to professional networks (Halabisky, 2015[179]).

Fintech and Venture Capital funds should be designed to promote financial inclusion and enable women entrepreneurs to leverage new fintech opportunities

Although companies with women-only founders received just 2% of VC funding in 2020, crowdfunding and fintech have contributed to support women-led business ventures. Thus, policy action can also be directed towards (i) monitoring developments in fintech to ensure that they contribute to financial inclusion, (ii) investing in the financial literacy training of female entrepreneurs, and (iii) counteracting potential sources of bias and disadvantage that may emerge from greater reliance on algorithms in decision-making by lenders and investors (Halabisky, 2015[179]).

Three recent projects aim to empower female entrepreneurs through a focus on Research and Regulation Support, Training and Networking Opportunities and Support for Existing Infrastructure

First, the Swedish Innovation Agency (VINNOVA) supports research projects that monitor and measure discrimination in the financial sector. These projects help financial regulators balance consumer protection with financial innovation.
Second, the Power for Female Entrepreneurs programme in Spain enables women entrepreneurs to participate in e-commerce and digital marketing bootcamps. This programme provides learning and networking opportunities, equipping women with essential skills for the digital economy.
Finally, the WILLA Women in Fintech accelerator programme in France was established to assist women entrepreneurs already in fintech fields. It came after research showed that start-ups with at least one female founder performed 63% better than those founded exclusively by men, despite only 1 in 10 fintech start-ups being founded by women in 2018 (WILLA, 2019[180]).

Funds specifically targeted at female-led startups represent another tool to bridge existing gender gaps in entrepreneurship finance

Strategies of this kind can play an important role in supporting a more diverse and inclusive pipeline of entrepreneurs by doing more to address the gender gap in business finance. For example, Canada’s Women in Technology Venture Fund (launched in 2018) and Australia’s Female Founders Initiative (launched in 2020) aim to promote diversity and inclusion within the entrepreneurial ecosystem. Ireland’s Competitive Start Fund for Female Entrepreneurs has seen significant upscaling in recent years, providing further support for women-led ventures in high-growth sectors (OECD, 2023[160]).

Inclusive entrepreneurship policies are crucial for supporting business creation among under-represented groups who often face disadvantageous circumstances.53 The primary objectives for inclusive entrepreneurship policies are twofold. On one hand, they should raise awareness and motivation, ensuring that people in underrepresented groups understand the potential of entrepreneurship as a viable labour market activity and encourage them to pursue it. On the other hand, they must contribute to address existing market failures and tackle institutional and behavioural barriers that may disproportionately affect disadvantaged groups. This includes reducing barriers to access to financial markets, supporting the development of entrepreneurship skills, fostering entrepreneurship networks and promoting an entrepreneurial culture.

Inclusive entrepreneurship policies vary across countries in terms of their focus and implementation. In the EU, for example, more than half of Member-States have strategies that (i) support entrepreneurship among youth, women and the unemployed; and (ii) help individuals develop entrepreneurial mindsets and adapt to flexible work environments. While governments provide tailored entrepreneurship support schemes in many OECD countries, notably for women, there is scope to strengthen policy frameworks in order to ensure greater continuity, more efficient resource allocation and improved cohesiveness in these schemes. A promising example is Germany’s 2023 Action Plan for “More Female Entrepreneurs for Small and Medium-Sized Enterprises”, which includes over 40 actions structured around several pillars (BMWK, 2023[181]). Moreover, governments could better leverage the potential of migrant entrepreneurs, an essential yet often underutilised source of innovation and job creation, by adjusting support schemes to reflect the growth in migrant entrepreneurship. For instance, offering stronger networking opportunities can help migrant entrepreneurs integrate into local entrepreneurship ecosystems and increase their chances of success (OECD, 2024, pp. 121-165[162]). Other successful examples of programmes designed to address barriers to entrepreneurship can be found across OECD countries.54

4.2.3. Policies for promoting equal opportunities by investing in social infrastructure

Place-based policy instruments can foster investment in social infrastructure and enable individuals to realise the opportunities available to them, both in growing and lagging regions (OECD, 2025[5]; McCann, 2023[182]; Solé-Ollé, 2023[183]).55 The effects of mega-trends – including climate change, digital transformation, globalisation and demographic shifts – risk exacerbating existing disparities between regions in terms of economic, social and environmental outcomes. They may also create new economic opportunities across territories, for example through the spread of remote work. Managing these risks and harnessing the opportunities will require investment in social infrastructure and an emphasis on the provision of accessible quality services at the local level.56 Policies for promoting digital inclusion will be needed, for example, to enable lagging regions to harness the opportunities created by remote work (OECD, 2021[184]; 2021[185]). Policy interventions can also support community development and forms of activity such as volunteering which strengthen social connectedness, quality of life and economic growth at the local level (OECD, 2025[49]; Mahoney et al., 2024[35]; OECD/ICOM, 2019[186]). Providing affordable quality housing is also a key condition for access to economic opportunities. Measures designed to improve social infrastructure, including social housing policies, have an important role to play in achieving this objective (OECD, 2024[187]; 2020[46]). Finally, transport and urban policies provide means to better connect people with economic opportunities, independently of their background or place of residence (OECD, 2023[43]; 2020[188]).

Place-based policies and access to quality services

Place-based policies provide intentional and targeted support to specific areas with the aim of improving long-term economic development and well-being outcomes. Well-designed place-based policies aim to address market failures in a targeted and efficient manner. They are often directed at multiple complementary goals that may relate to productivity, environmental sustainability and social inclusion (OECD, 2025[5]). These policies include spatially-targeted investment in public services, such as education, skills, healthcare and policing, as well as investments in local infrastructure such as transport, housing and recreational facilities. They also rely on effective multi-level governance structures, recognising that successful economic development requires strong collaboration across different tiers of government. Intergovernmental fiscal transfers and frameworks play an important role in this context, as many core services are provided at local level by sub-national governments (OECD, 2021[189]).57 Although place-based policies are relevant for all territories, they are especially vital in areas that are experiencing persistent economic or social challenges and where public services are likely to be overstretched.

Facilitating access, delivery and integration of quality services at local level constitutes a priority for spatially-targeted policies. As highlighted in Chapter 3, ensuring a more level playing field means addressing significant and persistent territorial disparities in terms of access to essential services and to economic opportunities. Challenges and service delivery conditions differ across types of regions,58 though accessibility tends to be lower for people in non-metropolitan and low-income regions (Almeida et al., 2024[6]). To reduce these gaps, governments can strengthen the provision of essential local services such as elementary schools and primary medical care in a cost-efficient way – for instance, through service co-location. Greater integration of employment, social and education services at the local level can also help promote opportunities for all citizens, and in particular for vulnerable populations, by facilitating effective labour market transitions and skills development (OECD, 2023[190]). At the same time, feasible digital or mobile alternatives should be explored, while specialised services may be consolidated in nearby regional centres. However, though electronic service delivery has a strong potential to improve access, it is not always an effective substitute, especially where the service requires some form of physical intervention, such as surgical interventions in hospitals for example. Moreover, the parameters within which national and local governments operate when providing these services are also undergoing significant change notably due to the effects of demographic transition, with many regions across OECD countries either losing population already or facing substantial ageing in the near future.

If handled well, the increased digitalisation of essential services will create opportunities to enhance place-based policies and reduce disparities in social infrastructure. Going forward, an increasing number of towns and villages across the OECD are projected to experience population decline and ageing. In this context, the provision of essential services will need to be complemented by targeted and coherent development strategies to help smaller places remain attractive. Digital inclusion should be promoted as it can bring large benefits to lagging territories. Remote work provides opportunities for economic development for these territories, though reaping the benefits from these opportunities will likely depend on regions’ capacity to attract the right set of industries and workers (Özgüzel, Luca and Wei, 2023[191]). The potential impact of the spread of remote work on social capital and social infrastructure also needs to be taken into account (OECD, 2021[185]; Algan, Malgouyres and Senik, 2020[44]).

Conversely, broader diffusion and use of Generative AI could change the exposure of regional labour markets to the risk of automation and exacerbate skills mismatches. Up till now, technology-led automation has mainly tended to affect non-metropolitan and manufacturing regions. Moving forward, regions that specialise in industries such as education, ICT, or finance – which have been less exposed to the risk of automation – may also face greater pressure due to the labour market effects of Generative AI (OECD, 2024[192]; 2023[193]). Several key policy measures can help ensure that digital transformation contributes to reduce regional disparities rather than deepening existing divides. Public-private sector collaboration can facilitate the adoption of AI tools. This could help raise regional labour productivity, mitigate labour shortages and offer new means to alleviate the effects of demographic ageing in regions experiencing significant population decline. Regional policymakers should also consider the new opportunities that AI tools may bring, such as promoting efficiency gains and enhancing the quality of regional public services or facilitating the labour market inclusion of people with disabilities. Collaboration with the social partners to monitor job quality and workers’ rights should accompany these efforts to ensure that the risks associated with AI tools are managed and mitigated (OECD, 2024[192]; 2023[193]; Krämer and Cazes, 2022[194]).

Housing policies, allowances and social housing

Housing policies can promote opportunities and help break the cycle of intergenerational disadvantage by expanding the supply of affordable housing and access to homeownership. Housing policy can support the development of social infrastructure by contributing to expand the supply of quality affordable housing (OECD, 2021[195]; 2020[46]). Trends in housing investment have been uneven across the OECD, with a sharp decline in public investment following the Global Financial Crisis. Overall, public investment in housing development has shrunk from 0.17% of GDP in 2001 to 0.06% of GDP in 2018 on average across OECD countries (OECD, 2021[195]). Furthermore, long-term challenges affecting the supply of and access to housing have been exacerbated by the effects of recent crises, most notably the COVID-19 pandemic and rising inflation (OECD, 2023[196]).59 In this context, factors such as rising construction costs, labour shortages, high land prices and restrictive regulations have constrained the housing supply, leading to affordability issues and barriers to access for many vulnerable groups, including youth and low-income families. Moreover, housing taxation often benefits owner-occupied housing more than rentals, which can undermine affordability and inclusion goals (Dewilde and Waitkus, 2023[197]).

Governments have a range of policy tools to promote access to homeownership and affordable housing for vulnerable groups, though trade-offs should be carefully considered. Social housing, housing allowances and support for homeownership are among the most widely used housing policy measures for addressing problems of access and supply in OECD countries (OECD, 2021[195]; 2020[46]).60 These tools can prove effective but may also imply trade-offs that need to be taken into account. The development of social housing offers a tool that can directly expand the supply of quality affordable housing for vulnerable groups (OECD, 2020[198]). Housing allowances help support demand for housing. However, they can contribute to upward pressure on housing prices in places where supply is constrained, undermining affordability objectives. Similarly, other demand-side measures, such as support for homeownership, need to be properly targeted towards vulnerable groups as they may otherwise end up mainly benefitting better-off households and contributing to a rise in housing prices. Among other possible measures, governments can rely on and strengthen first-time homeownership programmes to better target those in need, explore shared equity and ownership models and develop mortgage eligibility programmes for workers on temporary contracts. Expanding support in the private rental market, maintaining and upgrading social housing quality and fostering cooperative living arrangements can help young people gain access to stable quality housing.

Social housing can enhance opportunities for vulnerable groups, despite well-known challenges such as segregation and limited mobility. Effective social housing policies can improve housing affordability, increase access to housing and promote greater residential mobility. However, this implies properly addressing some of the potential risks associated with these policies, such as fostering segregation and trapping residents in cycles of limited opportunity (OECD, 2020[198]; Causa and Pichelmann, 2020[199]). Housing decisions reflect a historical legacy, with past policies often prioritising large developments on inexpensive land far from city centres. Housing segregation, characterised by the geographic concentration of households based on socio-economic, ethnic or racial factors, constitutes a challenge in many cities and regions across the OECD and a barrier to opportunities for economic, educational and social mobility (OECD, 2018[1]).

Preventing the spatial concentration of poverty within social housing estates constitutes a core objective for social housing policies. The sector has increasingly become home to lower-income and vulnerable tenants, with a narrower range of income levels.61 In some countries, this may notably be due to the sector's “residualisation”, tenure conversion schemes, choice-based letting systems and the tightening of eligibility criteria, as highlighted by evidence from the EU and the UK (Angel, 2018[200]; Manley and Van Ham, 2011[201]). Addressing these trends and challenges is essential to ensure the economic sustainability of the sector and reduce the spatial concentration of poverty and disadvantage. The relative size of the social housing sector has been shrinking in recent years in a majority of OECD countries (OECD, 2020[46]).62 However, there are substantial cross-country differences in the definition, size, scope, target population and types of social housing providers. For example, social rental housing makes up less than 10% of the total housing stock in most OECD and EU countries, but more than 20% in some cases.

Policies must take account of and reduce the negative effects of social housing tenure on mobility. Social housing tenants tend to be less mobile than private renters, though more mobile than homeowners. This lower mobility may be due to a process of self-selection in which less-mobile individuals are more likely to reside in social housing, or from “lock-in” effects driven by below-market rents (Causa and Pichelmann, 2020[199]). Lock-in effects occur when tenants lack incentives to relocate, even if moving would improve their employment prospects and income stability. This is notably the case under the following conditions: (i) a significant rent gap exists between social housing and the private market; and (ii) there is a shortage of social housing in other areas. At a broader level, lock-in effects may contribute to the observed correlation between social housing tenure and higher unemployment rates, prolonged unemployment spells and reduced mobility towards distant job markets, though evidence varies by country (Gregoir and Maury, 2018[202]; Battu, Ma and Phimister, 2008[203]; Flatau, Forbes and Hendershott, 2003[204]). Social spending on housing can significantly increase residential mobility among tenants when eligibility rules are designed to avoid lock-in effects (Causa and Pichelmann, 2020[199]). A larger social housing stock would increase the likelihood of relocating households (e.g., for employment reasons or due to life changes) being able to secure new social housing. Beyond financial support or in combination with it, other types of intervention including information provision and search assistance have been shown to promote greater residential mobility for low-income households (Bergman et al., 2024[205]).

Community development, volunteering and cultural policies

A comprehensive approach to community development can help strengthen social infrastructure at the local level. Comprehensive and well-designed local development policies, such as civic engagement initiatives and neighbourhood revitalisation programmes, can help ensure a more level playing field by increasing the stock of social infrastructure and providing equitable access to it for all, including vulnerable populations.63 This requires proper identification, targeting and monitoring of the infrastructure and characteristics (both physical and non-physical) that matter at the local level (OECD, 2025[49]). On the physical infrastructure side, transport and urban connectivity policies, along with policies aimed at improving access to services, represent particularly important levers and are discussed below. On the non-physical infrastructure side, volunteering and cultural policies are also explored in this section. Community capacity building (CCB) is another effective lever for which there is an established body of evidence and good practices (Noya, Clarence and Craig, 2009[206]). CCB helps promote social cohesion and active community participation and, in doing so, contributes to empower individuals to shape their own futures. In turn, neighbourhoods with a stronger sense of community can mitigate some of the negative effects of socio-economic disadvantage, such as lower perceptions of safety. Social cohesion – marked by shared norms, trust, and neighbourly support – has been associated with improved emotional development for children in disadvantaged neighbourhoods (OECD, 2025[207]).

Promoting volunteering activities and other forms of associative life also constitutes an effective way to build communities. The 2022 OECD Recommendation on the Social and Solidarity Economy and Social Innovation underlines the valuable contribution that civil society organisations and associations make in helping governments at all level promote opportunities for vulnerable populations and build communities.64 Children’s participation in community activities is influenced by the socio-economic composition of their neighbourhoods, particularly in relation to family structure and socio-economic status (OECD, 2025[49]; Gottschalk and Borhan, 2023[208]). Volunteering initiatives and solidarity programmes encourage interaction and cooperation among residents, which contributes to improve social capital and reduce disadvantages tied to individual backgrounds. For instance, financial constraints constitute an important additional barrier that can prevent children from lower-income families from participating in the extra-curricular activities that are critical for building social capital (Hjalmarsson, 2022[209]).

Several examples of impactful initiatives can be highlighted. In Canada, the Canada Service Corps (CSC) has made concerted efforts to sign contribution agreements with organisations that specialise in improving participation of Indigenous and underserved young people in volunteer service placements, with the aim of fostering a more inclusive service.65 Similarly, France, Italy and the Netherlands have developed programmes to enhance diversity and inclusion among volunteers (Gagliardi, Pérez-Raynaud and Robinson, 2024[210]). Countries can also implement targeted measures to ensure young people with disadvantaged backgrounds have the necessary capacity and resources to engage in organised volunteering opportunities. For example, in the European Solidarity Corps, individuals with fewer opportunities may receive increased financial support to cover specific expenses and needs.

Cultural policies can help improve social inclusion and cultivate skills and entrepreneurship, thereby strengthening social infrastructure and expanding opportunities. Cultural and creative sectors can be a powerful lever for local economic development, notably when they are supported by coherent place-based strategies and investments in cultural infrastructure and activities (OECD, 2022[211]; OECD/ICOM, 2019[186]). Cultural participation rates vary between and within countries and between people with different socio-economic characteristics. Overall, they tend to be higher in countries with higher public expenditure on culture, with likely mutually reinforcing effects between the two (OECD, 2022[212]). Within countries, participation is higher among people with greater levels of education and income, raising challenges for social inclusion. Various measures can be taken to address these barriers and fully capitalise on the potential of cultural participation for enhancing opportunities at national and local level. This includes better integrating cultural participation into wider policy agendas around health, societal changes, research and innovation, the environment and education.

Stronger collaboration between cultural and non-cultural institutions and strategies for culture-led regeneration can also bring economic benefits and enhance social cohesion.66 Local-level cultural policies can target cultural participation initiatives to marginalised communities, for instance through specific projects developed with local community groups (such as museum exhibitions or small festivals), reduced pricing or vouchers for certain groups (e.g., youth or low-income households), or efforts to improve cultural access in remote areas and disadvantaged neighbourhoods. Other options include strengthening connections between actors in the local cultural and creative sectors (CCS) – such as universities, schools, businesses, freelancers, not-for-profit and voluntary organisations – and reallocating unused spaces (e.g., former industrial districts and vacant warehouses) for cultural and creative purposes within integrated urban planning schemes.

Transport, connectivity and accessibility

More accessible and better-connected cities, towns and regional centres also mean greater access to essential services and to economic opportunities for everyone. Transport and connectivity are essential elements that contribute to the economic benefits of agglomeration, notably by helping foster positive spillovers between places (Ahrend et al., 2014[213]; ITF, 2008[214]). They also play a critical role in addressing inequalities of opportunity by reducing barriers to mobility linked to circumstances such as area of birth, gender and social background. Effective transport policies can help break patterns of segregation, improve access to opportunities and prevent the perpetuation of disadvantage. Addressing inequalities of opportunity through transport policies requires a holistic approach that integrates urban planning, housing and social policies. By enhancing accessibility, promoting inclusive urban forms and responding to the specific needs of vulnerable groups, transport systems can contribute to significantly reduce barriers to opportunities that relate to circumstances such as region of birth, gender and socio-economic background (OECD, 2020[188]).

Key recommendations for the improvement of urban accessibility focus on increasing capacity, speed and frequency. A reliable public transport system reduces commute times and expands access to better employment and education opportunities, particularly for low-income individuals (OECD, 2024[187]; Giuliano and Hanson, 2017[215]). For example, Prague and Warsaw have implemented integrated transport networks, making travel more seamless and affordable by encouraging public transport use. In turn, Madrid’s Intermodal Transport System ensures that the various forms of transport complement each other effectively, thereby enhancing connectivity. In the UK, a review of evidence for the Department for Transport emphasises the impact of reliable and affordable transport access on individuals' ability to reach employment, education and essential services. Among its recommendations, the review underlines the important role that improved public transport can play in mitigating inequalities by enhancing access to opportunities across socio-economic groups (Gates et al., 2019[216]).

Expanding regional transport networks to connect urban centres can help reduce regional disparities. Expanding transport networks lessens reliance on long commutes and fosters more inclusive cities by ensuring that people in less advantaged areas have better access to opportunities (OECD, 2025[217]; 2020[188]). Additionally, doing so can contribute to more liveable densities and facilitate mixed-use urban development, which can be designed to bring opportunities closer to disadvantaged populations. Ensuring the availability of sufficient affordable housing near transit hubs is a crucial condition for connectivity to benefit all citizens independently of socio-economic background. Focus should be put here on transit-oriented affordable housing to avoid displacing disadvantaged groups from accessible urban areas as a result of increased housing prices. Finally, accessibility needs to be planned and fostered with due consideration given to the needs of all populations, including people with disabilities, to connect all people to opportunities (OECD/ITF, 2024[218]). Furthermore, well-designed development patterns and compact urban form can contribute to improve accessibility, increase social cohesion and promote well-being in urban areas. As a result, urban policies constitute a powerful lever to complement other measures for ensuring a more level playing field, including housing, employment and local development policies (Ahlfeldt et al., 2018[219]).

4.3. Conclusion

Copy link to 4.3. Conclusion

Ensuring a more level playing field is an important priority in a context marked by profound transformation, as well as an essential condition for promoting social mobility and reducing inequalities. Building on the landmark contribution made by OECD (2018[1]), this report seeks to extend existing OECD analysis and advice on how to ensure a more level playing field. In order to do so, it uses an innovative methodology and draws on the latest OECD research to provide an in-depth assessment of (i) the role that inherited circumstances and factors beyond an individual’s control, as opposed to personal agency and effort, play in shaping economic outcomes; and (ii) the extent to which opportunities are evenly shared, or not, across the population. In this perspective, the report has developed an indicator for measuring inequality of opportunity which is in line with the economic and conceptual literatures (see Chapter 1). As such, it complements existing OECD indicators on the distribution of outcomes and on intergenerational mobility. The broader aim in doing so is to provide a richer “three-dimensional” picture of inequality that takes better account of countries’ specificities and can help guide policy more effectively.

The report shows that significant challenges remain in terms of the overall influence of circumstances beyond individuals’ control and of access to some of the key drivers of opportunity. The analysis highlights the fact that in OECD countries individuals’ outcomes are shaped to a significant degree by circumstances beyond their control (Chapter 2). Cross-country comparison suggests however that there is plenty of scope for peer learning and identifying relevant good practices from the comparison of national experiences on how countries seek to ensure a more level playing field. Similarly, access to the key drivers of economic opportunity, including education, health and employment, are subject to persistent and sometimes large territorial disparities in OECD countries (Chapter 3).

To help put these insights into action, the report proposes a framework as a possible device for informing effective policy responses. This framework follows the objective set out in the conclusion to A Broken Social Elevator? of providing policymakers with a “roadmap” for promoting social mobility and equal opportunities (OECD, 2018, p. 332[1]). This framework is organised around two connected goals for policy: (i) increasing the economy’s capacity to provide opportunities for individuals (Economic dynamism); and (ii) increasing individuals’ capacity to realise the opportunities available to them (Endowments). When considering the endowments channel, the focus is extended beyond human capital and encompasses other types of endowment that are essential for realising opportunities: economic resources and social infrastructure.

In doing so, the framework underlines the importance of:

Strengthening early childhood interventions and sustaining them throughout the educational lifecycle. Here, the aim consists in ensuring equitable access to human capital development opportunities and supporting the full development of skills within a lifelong learning framework.
Providing financial support and targeted programmes to equip individuals with the economic resources they need to realise opportunities and overcome disadvantageous circumstances. Here, particular emphasis is put on building economic resources and facilitating access to credit, as well as on the development of effective tax-benefit and housing policies to address the effects of disadvantage on opportunities.
Enhancing physical and non-physical social infrastructure to promote community cohesion and accessibility of services. Here, attention is given to measures that can improve access to key physical infrastructure, to fostering norms and networks that can help people connect to economic opportunities and to overcoming geographic barriers to opportunities, notably for underserved regions and disadvantaged neighbourhoods.

The premise is that when individuals can fully develop their human capital, mobilise sufficient economic resources and have access to enabling social infrastructure, they are better positioned to realise opportunities on the labour market, achieve economic mobility and break cycles of poverty and social exclusion. Finally, this chapter reviews a selection of policy options for achieving this objective.

A broad range of policies can help equip individuals with the endowments they need to freely pursue and realise the opportunities available to them. The challenge consists in ensuring that policy responses are adapted to the barriers encountered and comprehensively address the different types of endowments that contribute to strengthen individuals’ capacity to realise opportunities. The framework provides a means to map potential barriers to policies. The review discusses a select range of policies that may be effective for addressing these barriers. The policies reviewed include:

Early interventions in education and health
School-focused and adult-learning policies
Financial incentives for skills development
Anti-discrimination policies and measures
Tax-benefit policies
Capital and inheritance taxation
Child Development Accounts
Financial Inclusion
Support for entrepreneurship
Place-based policies and access to quality services
Housing policies, allowances and social housing
Community development, volunteering and cultural policies
Transport, connectivity and accessibility

Although they are not exhaustive, these policies outline a broad range of established options and innovative interventions for enhancing human capital, economic resources and social infrastructure as part of comprehensive responses. By supporting the development of these endowments, addressing sources of disadvantage and expanding access to opportunities regardless of individual circumstances, effective policy responses can help ensure a more level playing field and create more equitable societies where everyone has a fair chance to thrive and reach their full potential.

Building on this report, the OECD is exploring some possible next steps to further deepen the analysis of social mobility and equal opportunity. Continued data innovation and development of the statistical infrastructure are necessary to improve the measurement of social mobility and equal opportunity, as well as to fully leverage the insights that can be gained from comparative analysis both within and across countries. Here, the OECD is notably seeking to extend the country coverage and collect more granular data to develop evidence at a finer territorial scale. Doing so can help guide policy at a local and regional level – including municipalities and small regions – and address key territorial challenges, such as those relating to rural-urban divides or to neighbourhood effects. Efforts are also being made to broaden the analysis by complementing survey data with additional sources, including administrative data and registries. Doing so will provide a more precise picture of individual outcomes, conditions and trajectories that can help improve policymakers’ and the public’s understanding of what drives social mobility and opportunities and how they differ across population groups. The OECD Observatory on Social Mobility and Equal Opportunity has a key role to play in consolidating these efforts. (https://www.oecd.org/en/about/programmes/observatory-on-social-mobility-and-equal-opportunity.html).

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Annex 4.A. Overview of Child Development Account Policies

Copy link to Annex 4.A. Overview of Child Development Account Policies

Country	Initiative	Starting year	Source of funding	Eligibility and enrolment	Withdrawals and use of funds	Initial incentives	Matching contributions
Canada	Canada Education Savings Program (CESP)	1998	State Funds (Federal and provincial)	Any Canadian child with a Registered Education Savings Plan (RESP) is eligible, before reaching age 18. An application for the funds is required.	The funds accumulated can be used for post-secondary educational purposes for the beneficiary or transferred to a sibling.	The Canada Learning Bond (CLB) gives an initial incentive of CAD 525 to low-income families to save for the children's post-secondary education, when a RESP is opened. An additional amount of CAD 100 is paid for each year of eligibility, up to age 15, reaching a maximum total of CAD 2 000.	The Canada Education Savings Grant (CESG) supplies a 20% match on the initial CAD 2 500 contributed to the RESP annually. Low-income families can receive an additional 20% match on the first CAD 500 deposited annually. The CESG lifetime limit is CAD 7 200 per beneficiary.
Hungary	FÉTÁM (Youth Start-Of-Life Support)	2006	State Treasury	Every child born of Hungarian nationality receives a start-of-life allowance. The parents need to request the opening of the account.	The account can be opened at any time until the age 18. The funds can be withdrawn when the beneficiary turns 18, but not before the third year after the creation of the account.	The State Treasury deposits HUF 42 500 for every newborn and the amount is increased annually with an interest rate subsidy equal to inflation. Then, a second and third deposit of the same amount is made to the child's account respectively at age 7 and age 14.	Parents and family members can contribute to the savings and a 10% state subsidy is paid on these contributions, up to HUF 12 000 per year. If the child is eligible to regular child protection allowance and lives in Hungary, the state subsidy is set at 20%, up to HUF 24 000 per year.
Israel	Saving for Every Child Program (SECP)	2017	State funds	Every child born with Israeli residency is eligible to the account. This includes Israeli citizens and Palestinian children in East Jerusalem. The accounts are opened automatically. The parents have six months to select an investment profile, otherwise a default option is selected.	The beneficiary can decide to withdraw the amount at age 18 with parental approval or at age 21 without any approval. The use of the funds is not restricted to specific uses.	NIS 57 are deposited every month. Parents can decide to double the amount, contributing an additional NIS 57 per month from the Child Allowance Funds. Children born from 2017 onwards receive three bonuses: NIS 284 at age 3, NIS 284 at age 12 for girls and 13 for boy, and NIS 568 at age 21.	None
Korea	Didim Seed Savings Account	2007	State funds	Until age 17, Korean children residing in child welfare institutions or households receiving welfare benefits, with incomes at or below 50% of the median, are eligible. The family needs to apply.	At age 18, beneficiaries can withdraw the funds for educational, housing, medical and business purposes, but also for personal events, such as marriage. After age 24, the funds can be used without any restriction.	None	Parents and family members contribute to the account and the government matches at a 1:2 rate, up to KRW 100 000 per month.
United Kingdom	Child Trust Fund (CTF)	2005 (Ended in 2011)	State funds	All children born in the United Kingdom are eligible to a long-term tax-free savings account. The account is automatically opened by the state, if the parents did not do so within one year.	At age 16, children can start managing their account, and at age 18, they can start withdrawing funds. The funds' purposes are not restricted.	The first voucher of GBP 250 is deposited at the account opening, then other GBP 250 at age 7. Children from low-income families receive GBP 500 vouchers both times.	Parents and family members can contribute with additional deposits up to GBP 9 000 per year.
United States of America	529 College Savings Plan	Between 1988 and 2018 (Conditions for the 529 College Savings plan were revised in 2018 as part of a rewrite of the tax code [Internal Revenue Code] by Congress)	None	Every family member of an American child can open an account, serving as a framework for the accumulation of assets designated for post-secondary education expenses.	Withdrawals can only be made to pay for higher education expenses in any college or university, also outside of the USA. Up to USD 10 000 per person can be withdrawn annually for educational purposes.	None	None. Any family member can contribute to the account.

State/City	Initiative	Eligibility and enrolment	Withdrawals and use of funds	Initial incentives	Matching contributions
Connecticut	CT Baby Bonds	The policy is limited to low-income children (born under the HUSKY health insurance coverage [Medicaid]) and the enrolment is automatic.	The funds are restricted to education, housing, business or retirement saving purposes. The funds can be accessed at age 18.	Initial deposit of USD 3 200 to all accounts.	None (no family contributions allowed).
District of Columbia	Child Wealth Building Emergency Act	The policy is limited to children born in households eligible to Medicaid, and with an income inferior to 300% of the Federal Poverty Level. Enrolment is automatic.	The funds are restricted to education, housing, business or retirement saving purposes. The funds can be accessed at age 18.	Initial deposit of USD 500 is provided to all accounts. Additional annual deposits are made, depending on the family's income.	None (no family contributions allowed).
Oakland (California)	Brilliant Baby	The programme is limited to low-income children.	The programme relies on 529 college savings account.	Initial deposit of USD 500 when a 529 college savings account is opened.	None
St. Louis (Missouri)	College Kids	The programme is limited to children starting kindergarten in a public school. Enrolment is automatic.	The funds are restricted to post-secondary education expenses.	Initial deposit of USD 50 to all savings account. Additional incentives are provided if parents take part in financial literacy classes and for every additional year of school attended by the child.	Up to USD 100.

Country	Initiative	Starting year	Source of funding	Eligibility and enrolment	Withdrawals and use of funds	Initial incentives	Matching contributions
Kazakhstan	National Fund for Children	2024	State funds	All citizens of Kazakhstan born after 2006 are eligible, even if born abroad. The account is opened automatically for each child.	The funds can be withdrawn when the beneficiary turns 18. If no withdrawal is made after a period of 10 years, the funds will be transferred to an individual pension account as voluntary contribution. The main purpose of the funds is for education purposes and housing.	The National Fund will deposit USD 100.52 in each account. The amount is set to increase annually, as the National Fund will allocate 50% of its annual investment income to the accounts.	None
Singapore	Baby Bonus Cash Gift (BBCG)	2001	State funds	The account can be opened for any Singaporean citizen whose parents are lawfully married. The parents need to apply online registering the child's birth.	The funds can be used for child-related expenses until primary school.	The programme provides SGD 11 000 for the first and second children, SGD 3 000 for subsequent children. The funds are disbursed on the Child Savings Account (CSA).	None
	Baby Bonus Child Development Account (CDA)	2001	State funds	The account can be opened for any Singaporean citizen whose parents are lawfully married. The parents need to apply online.	The funds can be used for child-care, health expenses and education, until the child turns 12. The funds left in the account are automatically transferred to the Post-Secondary Education Account.	A CDA First Step Grant of SGD 5 000 is automatically deposited in the account of children in all birth orders.	The Government matches 100% of parents' contribution, up to a co-matching cap that goes from SGD 4 000 to SGD 15 000 depending on the child's birth order.
	Post-Secondary Education Account (PSEA)	2007	State funds	The account is automatically opened for all eligible Singaporean citizens. To be eligible, children must have a balance in their CDA or Edusave, or be eligible for other social benefits.	The funds can be used for post-secondary education costs at approved programmes and institutions. At age 31, the account is closed and the remaining funds transferred to the Central Provident Fund account.	Some public contributions are occasionally made according to budget availability, depending on the eligibility of the beneficiary.	Parents can contribute to the account, receiving 100% government matching up to the CDA's matching cap.
	Edusave	1993	State funds	An account is automatically created for every Singaporean citizen.	The use of funds depends on whether the school is funded by the Ministry of Education or not. Generally, the use is restricted to school fees and approved personal development programmes.	The Ministry disburses an annual contribution for children between the ages of 7 and 16. Primary school students receive SGD 230, secondary school students receive SGD 290.	None
Taiwan	Children Future Education and Development Accounts (CFEDAs)	2018	State funds	Children from middle- and low-income families are eligible, including children in welfare institutions. The family has to request the opening of the account from birth, but a review of the application is done according to further criteria.	The purpose of the funds is restricted to higher education, training and business start-up costs. Funds cannot be withdrawn before age 18.	At the opening of the account, the government deposits TWD 10 000.	For each annual deposit made into the account, the government will add a matching sum, capped at TWD 15 000.

Notes

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← 1. The annual rate of inter-regional migration across the OECD is low. It stands currently at around 3% of the population each year and at less than 1% in some OECD countries (OECD, 2025[5]).

← 2. Furthermore, high levels of geographic mobility, particularly among younger populations, may reflect a lack of educational or job opportunities in their regions of origin and an insufficient focus on the local interventions needed to promote them.

← 3. In the context of this framework, the distinction between economic dynamics and endowments is made for heuristic and practical purposes. These channels allow for the identification of different types of barriers to equal opportunity, as well as different policy levers for addressing them. From a conceptual perspective, they can be understood as referring to two specific but complementary aspects of a common goal. As such, these two channels may receive different emphasis when designing policy responses depending on the nature of the challenges encountered or on policymakers’ priorities. However, to ensure a more level playing field, it is essential that both of these channels and the aspects they cover be taken into account: the capacity of the economy to produce opportunities and the capacity of individuals to realise them; ensuring opportunities are as evenly distributed across territories as possible and ensuring everyone is in position to realise them.

It should also be noted that there are strong potential synergies between the two channels. Greater economic dynamism can improve access to opportunities, resulting in increased endowments and a stronger capacity by individuals to realise opportunities. Similarly, reducing inequality of opportunity by investing in individuals’ endowments can also contribute to greater economic dynamism. While this issue is not covered extensively in this chapter, it has been addressed in other OECD work, as well as in the broader literature on inclusive growth and on the economic returns on social investment. See for example OECD (OECD, 2018[220]; 2018[247]), European Council (2024[221]), Hemerijck et al. (2024[222]) and Llena-Nozal, Martin and Murtin (2019[248])

← 4. See, for example, OECD (2024[250]; 2023[42]; 2018[249]; 2018[220]; 2018[247]) and Tsvetkova et al. (2020[251]).

← 5. PISA data across 31 OECD countries show that, before adjusting for socio-economic background, urban students outperform rural students in reading by an average of 45 points – equivalent to more than a full year of schooling (OECD, 2025[252]). This partly reflects the higher costs of education provision in sparsely populated areas. For example, OECD calculations find that annual costs per student in sparse rural areas are 20% higher on average (EUR 720) compared to cities for primary schools and 11% (EUR 681) higher for secondary schools. The cost difference rises above 40% for primary schools in some cases, such as Estonia, Finland and Latvia (OECD/EC-JRC, 2021[264]).

← 6. Asset poverty is an important measure of economic resources and the extent to which these resources offer protection against income shocks. For example, in 2017, 50% of people in middle-income households in OECD EU countries, and even 20% of those in high-income households were considered to be “financially fragile” – meaning that they had insufficient liquid assets to stay above the poverty line for at least three months in case of a sudden loss of income (OECD, 2023[16]).

← 7. Household net wealth, as defined in the OECD Guidelines for Micro Statistics on Household Wealth OECD (2013[253]), consists in the value of marketable financial and non-financial assets net of the value of liabilities held by private households residing in the country.

← 8. A recent study by the Netherlands Bureau for Economic Policy Analysis (CPB) provides an interesting example at national level (Schulenberg et al., 2024[223]). This study confirms that the children of wealthy parents are on average wealthier than their peers. It also identifies the main direct and indirect channels through which financial position is transmitted from parents to children. Among the direct channels, this includes start-up capital at the beginning of adult life, gifts and financial support in purchasing a home. Among the indirect channels, parental wealth is shown to contribute to the development of children's human capital through assistance with education and the development of skills that increase future income and wealth. More broadly, the role played by the intergenerational transmission of wealth in shaping opportunities has also become a salient topic in public debates, as highlighted for example in The Economist (2025[224]).

← 9. Some evidence also suggests that children of homeowners tend to achieve better educational outcomes and later perform better in the labour market compared to those whose parents were renters (Haurin, Parcel and Haurin, 2002[225]).

← 10. A similar analysis conducted in Balestra, Caisl and Hermida (2025[20]) reveals consistent upward trends in several OECD EU countries.

← 11. On the different definitions and approaches to social infrastructure, see OECD (forthcoming[34]) and Renner, Plank and Getzner (2024[244]).

← 12. As highlighted throughout the report, “place” plays a crucial role in shaping individuals’ opportunities. The effects of territorial disparities and place-based factors on opportunities are cross-cutting and affect individuals’ capacity to access, develop and use other fundamental types of endowment (i.e., human capital and economic resources) as well as social infrastructure. For the purpose of this chapter, place-based policies receive a separate discussion in relation to social infrastructure in order to emphasise the role these policies play in enhancing social connectedness and sense of community and in connecting individuals to opportunities at the local level. The choice to emphasise this particular channel does not imply that the role of place-based policies is limited to addressing disparities in social infrastructure or that social infrastructure should be given priority when using place-based policies to ensure a more level playing field.

← 13. Ongoing efforts are also being made to measure and quantify the impact of the Social and Solidarity Economy on a broad range of economic, social and well-being outcomes (OECD/European Union, 2024[254]; OECD, 2021[255]).

← 14. This can be seen for example in differences in levels of trust and citizen participation, in the presence of associations, volunteering and grassroots entities, or in cultural activity and social innovation.

← 15. Examples of “core” policies reviewed in Section 4.2 include: education and skills, taxes and benefits, place-based policies, housing policy… Examples of “new” policies include: inheritance taxation, child development accounts, connectivity…

← 16. See, for example, European Council (2024[221]), Hemerijck et al. (2024[222]) and Llena-Nozal, Martin and Murtin (2019[248]).

← 17. This point is often raised by conservative thinkers in the discussion of equal opportunities and economic fairness. See, for example, Azerrad (2025[226]).

← 18. The value of mentoring programmes is also underlined in the 2021 OECD Recommendation on Creating Better Opportunities for Young People.

← 19. For example, texting-based initiatives designed to encourage at-home reading and improve school attendance have been applied and assessed in a number of countries, including France, the United Kingdom and the United States. Evidence from these experiments suggests that they contributed to increase the amount of time parents spent reading with their children, thereby promoting early literacy and school readiness (Barone et al., 2018[246]; Damgaard and Nielsen, 2018[227]; Miller et al., 2016[228]).

← 20. See OECD (2025[252]) for examples of effective policies targeted at rural areas.

← 21. Greater competition among schools can lead to increased sorting of students by ability and socio-economic status. Furthermore, school segregation can deprive children of opportunities to learn, play and communicate with other children from different social, cultural and ethnic backgrounds, which may reduce social cohesion.

← 22. School choice design should also take account of geographic differences, as policies that works well in urban contexts may not be effective in rural areas.

← 23. Grade repetition tends to disproportionately affect students from disadvantaged backgrounds, who are nearly twice as likely to repeat a grade compared to their peers even after accounting for differences in academic performance. Furthermore, it may have a negative impact on motivation, can delay the identification of struggling students and does not necessarily lead to improved learning outcomes (OECD, 2013[256]; 2013[257]).

← 24. The Canadian province of New Brunswick has recently developed an innovative career education framework in partnership with the OECD. This framework enables high-school students to participate in a four-year career development and higher education planning programme. Evaluation based on a randomised control trial offers strong evidence of long-term benefits from career guidance intervention (OECD, 2024[263]).

← 25. Here, specific attention should be given to the situation and needs of populations that are particularly vulnerable on the labour market, such as young adults not in employment, education or training (NEET), women who have left the labour market due to care responsibilities, single mothers and immigrant populations.

← 26. See for example, the European Union’s European Agenda for Adult Learning 2021-2030: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32021G1214(01).

← 27. This so-called “Matthew effect” is a well-recognised feature in adult training and learning and an important challenge to overcome in order to promote lifelong learning opportunities for all (Martin, 2018[229]).

← 28. The evaluation of France’s Compte Personnel de Formation (CPF) provides a topical example (Perez and Vourc’h, 2020[258]). The primary objectives of the CPF consist in: (i) encouraging and implementing personal autonomy in selecting and undertaking training; (ii) improving skill levels by guiding individuals towards qualifying training programmes; and (iii) reducing inequalities in access to training. The evaluation highlighted several issues that disproportionately affect disadvantaged workers. These include a lack of awareness about the scheme's existence, leaving many workers unaware of the opportunities available to them, and insufficient information to make informed training choices, particularly regarding labour market demands, prospects in specific trades and the quality of training providers. A final limitation relates to individuals’ limited capacity to accurately assess their suitability for certain training programmes or career paths. These barriers suggest that providing financial resources alone will not be sufficient to address inequalities in opportunities for training and skills development.

← 29. Here, OECD (2020[111]) proposes a 10-point checklist for public initiatives aimed at fostering diversity and reducing structural barriers which can serve as a starting-point or template.

← 30. When assessing the impact of tax and transfer systems, fiscal decentralisation and the role of intergovernmental transfers should also be taken into account. While the analysis in this section focuses on the national level, sub-national governments have considerable responsibility for providing health and education services, as well as infrastructure. For example, the latest OECD data available show that, in 2023, they managed 55% of public investment on average and two-thirds of climate-related public investment (OECD, 2025[230]).

← 31. “Effectiveness” is understood here in terms of the observed reduction in inequality of opportunity associated with each type of measure. The analysis conducted in this section does not allow for the identification of causal relations.

← 32. An analysis of cross-country data for 2019 reveals only a weak relationship between net total social expenditure in % GDP, as available in the OECD Social Expenditure Database, and the overall mitigating effect of the tax-benefit system on inequality of opportunity (correlation coefficient of 0.17).

← 33. Similarly, in a context of high unemployment, disadvantaged jobseekers who do qualify for unemployment benefits may be more likely to exhaust their entitlements without finding work.

← 34. See the OECD Child Well-Being Data Portal: https://www.oecd.org/en/data/datasets/oecd-child-well-being-data-portal.html.

← 35. For example, a recent study on the persistence of poverty across generations finds that taxes and transfers in Australia, Denmark and the UK are more effective in reducing intergenerational poverty than the tax-and-transfer system in the United States (Parolin et al., 2025[57]).

← 36. Other existing studies also support this conclusion, see for example Filauro, Palmisano and Peragine (2023[231]). Here again, it should be noted that intergovernmental transfers can add to the effect of people-centred policies by helping address regional disparities and ensuring appropriate funding for infrastructure and services in all regions.

← 37. Across the 27 countries covered in the Opportunities Module of the 2022 round of the OECD Risks that Matter Survey, over 60% of respondents believe that coming from a wealthy family shapes an individual’s chances to get ahead in life (OECD, 2023[142]). On the impact and consequences of inequality of opportunity on public perceptions and attitudes, see also Chapter 1.

← 38. Inter vivos gifts (i.e., lifetime gifts) are particularly relevant for opportunity and economic fairness as they can be targeted to support individual at critical points and milestones during their life-cycle. See the analysis on wealth transfers in Section 4.1.2 and in particular Figure 4.3.

← 39. For example, inheritance tax in the UK is forecast to generate GBP 8.3 billion in revenue in 2024-25 – equivalent to 0.7% of all tax receipts and 0.3% of national income. This reflects an upward trend that is also driven by recent policy changes (i.e., limiting inheritance tax relief on business property) and is expected to continue, with receipts estimated to reach GBP 13.9 billion by 2029-30 according to the Office for Budget Responsibility’s (OBR) October 2024 Economic and Fiscal Outlook (https://obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/inheritance-tax/). The OBR estimates that these changes could contribute to raise GBP 500 million annually from 2027-28, reflecting both policy adjustments and broader economic factors, despite the uncertainty associated with potential behavioural responses from tax-payers. This trend may also be meaningful in light of empirical evidence suggesting that the limited size of the revenue generated leaves inheritance taxes vulnerable to repeal. In this respect, as inheritance taxes play a larger role in the national revenue system over time, they may also tend to become more robust and legitimate (Genschel, Limberg and Seelkopf, 2023[232]).

← 40. Moretti and Wilson (2023[233]) finds significant mobility responses to differences in estate taxation across US states among billionaires, especially as they grow older. Similarly in the case of Spain, Agrawal, Foremny and Martínez-Toledano (2025[234]) finds that following the decentralisation of wealth taxation in 2011, which saw all regions except Madrid levy positive tax rates, the region of Madrid experienced an influx of wealthy individuals. In this case, tax competition and increased wealth mobility led to a significant overall loss in total regional tax revenue.

← 41. Knowledge gaps tend to be particularly large in the case of inheritance and estate taxes, suggesting there may be scope to increase support through the provision of information. For example, results from large-scale surveys studying the public’s understanding of inheritance taxation show that US respondents overestimate the share of households who pay the estate tax by several orders of magnitude (an estimated 36% on average against an actual share of less than 0.1%) (Stantcheva, 2021[146]).

← 42. Stantcheva (2021[146]) finds however that, in the case of the United States, respondents for whom perception gaps are largest also tend to be those who are least open to information. This suggests that other psychological or socio-political processes may be at play, such as information avoidance or polarisation of views. If so, there may be limits to the effectiveness of information provision in shifting perceptions and building support for inheritance taxation. Broader strategies and a greater focus on the conditions for public acceptability may therefore be needed to successfully implement inheritance taxation reform (OECD, 2025[76]; 2021[75]; Goss, 2024[141]).

← 43. Atkinson’s proposal consists in a universal endowment awarded to all young adults upon reaching a certain age, in the form of a lump-sum payment. The endowment aims to lessen the wealth constraints imposed by family origin and ensure a fair start in adult life. In line with this aim, the capital endowment would need to be substantial enough to serve as a “seed” capital and enable significant life investments such as education and training, starting a business, or other essential expenses which many recipients would not be in position to undertake without the endowment.

← 44. The United States’ 529 college savings plan is included as an example in Annex Table 4.A.1, though it differs from typical CDA programmes in several respects. Most notably, the 529 plan does not include any state contribution of any kind, although private contributions to these plans are given preferential tax treatment. All 50 US states and the District of Columbia sponsor at least one type of 529 plan dedicated to education-related expenses. Due to its recency and the timeline for the report, the details of the new federal CDA programme introduced in July 2025 through the One Big Beautiful Bill Act (OBBB) were not included among the examples in Annex Table 4.A.1. This new CDA programme is however mentioned in Box 4.4.

← 45. Korea constitutes an exception, having implemented targeted CDA programmes that cover low-income households and children in child welfare institutions.

← 46. These initial deposits may be targeted specifically to low-income households, as with the Canada Learning Bond (CLB) for example.

← 47. For example, in the case of the UK CTF, low-income families enrolled under the programme saved an extra GBP 517 compared to non-CTF-eligible children with a similar background. 88% of participating parents reported however that the CTF did not motivate them to save more for their other non-eligible children (McKay, Tian and Lymer, 2024[152]). In the case of Michigan’s MI-SEED pilot programme, the financial benefits were more noticeable, with participants accumulating USD 1 851 on average in 529 accounts for post-secondary education, compared to USD 323 for a control group (Huang et al., 2021[149]).

← 48. Similar results were also found in the case of pilot CDA programmes implemented in the Chinese province of Shanxi (Deng, 2019[156]).

← 49. See Annex 4.A for further detail. All CDA initiatives in OECD countries impose some form of restriction on access to the accumulated funds. Regarding age restrictions, all programmes set a minimum age for withdrawal at 18 years old, with Israel’s SECP offering an added financial incentive to postpone withdrawal until 21 years old. In relation to the use of funds, CDA savings can typically be withdrawn to support post-secondary education, but also in some cases to cover medical expenses or finance business endeavours.

← 50. For example, at the start of the CTF programme in the United Kingdom, financial education was included as part of the secondary school curriculum to help strengthen children’s financial literacy and awareness of the asset-building process (McKay, Tian and Lymer, 2024[152]). Effective default options for investment plans, notably gradual age-based strategies, can also help ensure CDAs deliver effective returns while limiting financial risk (Clancy, Sherraden and Beverly, 2019[235]).

← 51. See also OECD (2023, p. 85[16]) for a review of the various government programmes that can help build financial literacy and resilience, as well as McKnight and Rucci (2020[237]). Critics of this approach have argued that it contributes to shift part of the burden of risk from the state to individuals and their families, see for example Hacker (2008[236]).

← 52. To maximise the potential for reducing inequality of opportunity, prize-linked schemes, matched savings programmes and index-linked bonds are generally more effective than tax-based incentives. Low-income households have lower participation rates in tax-incentivised programmes, which can also lead to a reallocation of assets rather than an increase in new savings (OECD, 2018[1]; Fadejeva and Tkacevs, 2022[245]; Breunig and Sobeck, 2020[238]).

← 53. Inclusive entrepreneurship policies are explicitly aimed at ensuring a more level playing field in business creation. These policies, along with the schemes and measures used to implement them, focus on supporting groups that are underrepresented in entrepreneurship – such as women, migrants, youth, seniors, the unemployed and people with disabilities. By doing so, they contribute to ensure that everyone has an equal chance to start and run a business, regardless of their personal characteristics or background.

← 54. Programmes such as the UK's Start Up Loans initiative provide access to credit and enable self-employment opportunities regardless of background or inherited circumstances. Similarly, broader EU initiatives aim to foster entrepreneurship, such as those under the European Social Fund (ESF), which supports training and skills development to improve self-employment prospects, and Erasmus for Young Entrepreneurs, which offers aspiring entrepreneurs the opportunity to learn from experienced business owners. Moreover, the Next Generation EU Economic Recovery Package includes dedicated start-up funds for young entrepreneurs as part of broader post-pandemic recovery efforts. Comprehensive overviews of these and other initiatives have been compiled by the EU Youth Wiki, highlighting the wide range of support available to young and aspiring business owners: https://national-policies.eacea.ec.europa.eu/youthwiki/policy-fields/3-employment-entrepreneurship

← 55. The OECD and the European Commission organised a series of High-Level Expert Workshops in 2023 as part of a project on “Place-Based Policies for the Future”. The outcomes of these workshops can be found on the following link: https://www.oecd.org/en/about/projects/place-based-policies-for-the-future.html

← 56. For detailed analysis of the impact that regional disparities in access to quality services have on opportunities, see Chapter 3 and Box 2.1 in Chapter 2.

← 57. In 2023, sub-national governments managed 38% of total public expenditures and 55% of total public investment in OECD countries (OECD, 2025[230]).

← 58. For example, rural areas tend to face longer travel times and higher costs of provision, while urban areas may have to contend with issues of congestion and quality of services.

← 59. The European Commission provides similar findings for EU countries. Before the COVID-19 pandemic, the estimated investment gap in social and affordable housing sector in Europe was estimated at EUR 57 billion annually. This gap would require the equivalent of a 25% increase in investment to be filled (Fransen, del Bufalo and Reviglio, 2018[239]).

← 60. See the OECD Affordable Housing Database for detailed data on a wide range of housing policy tools, including those discussed here (https://www.oecd.org/en/data/datasets/oecd-affordable-housing-database.html).

← 61. For instance, the concentration of social housing in specific neighbourhoods and higher levels of ethnic segregation are strongly correlated in most Nordic countries (Andersen et al., 2016[241]). In France, social housing – which increasingly accommodates blue-collar workers and non-European immigrants – remains more segregated than private rental or owner-occupied housing.

← 62. Reduced public investment is also observed in countries – such as Austria, Denmark and the Netherlands – where social housing has traditionally formed a key “third sector” in the housing market.

← 63. Notable examples include Copenhagen’s policies on social bonds for the revitalisation of declining neighbourhoods, the UK’s Big Local programme, which funds local projects to improve community areas, and the AmeriCorps programme in the United States, which promotes community service and offers educational awards for volunteering (OECD, 2024[261]; 2024[262]; Gagliardi, Pérez-Raynaud and Robinson, 2024[210]).

← 64. See https://www.oecd.org/en/topics/sub-issues/social-economy-and-social-innovation.html.

← 65. During the CSC’s 2023 programme intake, organisations meeting specific diversity-related criteria were prioritised for funding. These criteria included having leadership or governance bodies representative of the youth populations they serve or of youth-led organisations (Employment and Social Development Canada, 2024[242]). Moreover, the CSC mandates that at least 50% of total youth participants in all projects identify as Indigenous youth, underserved youth or both.

← 66. "Place-making" aims to make cities and regions more attractive for work and living by encouraging inward investment, labour flows, higher productivity and increased tourism. Culture-led regeneration and development policies focus on fostering economic and social growth by promoting cultural and creative activities. However, these approaches also come with various risks of gentrification, impoverishment and inequality in large cities, as shown for example in Tozzi (2023[243]) in the case of Milan.

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