A recent OECD report confirms that the social elevator is broken, and inequality has been increasing on a global scale during the last 25 years. Children born into the bottom of the earnings distribution have less chance to earn higher salaries than their parents and inequality does not appear to be compensated by faster mobility.
This social immobility is also visible during the individual lifetime. For example, over a four-year period, about 60% of people remain stuck at the bottom 20% of the income distribution and lucky top earners have 70% chance to stay in their favorable position in the same timeframe.
OECD reports also emphasize that a broken social elevator could threaten democracy by making people less happy, centered on their own group and attracted to extreme or radical voting. Indeed, the feeling of being stuck in a low group reduces people’s endorsement of the political system as fair and meritocratic. Moreover, innovation and growth are impacted by the fact that talents in low-income groups never manifest themselves due to limited access to education and health care. Entrepreneurial opportunities are often missed by low-income groups due to a lack of knowledge in terms of finance possibilities.
In this situation, OECD recommends health and educational public expenses to be more allocated towards disadvantaged groups, especially single-earner families, to facilitate mixed-income areas, to make access to credit easier and to propose a framework to smooth the impacts of shocks on the most vulnerable population.
Emeric Nicolas, Head of Data Science Dpt. - Sources: Beyond Ratings, OECD