Social mobility and earnings change over the life-cycle

Published on Incomes and Inequality

Since the emergency budget in June of this year, government policymaking has been unswervingly focused on reducing the deficit. However, the coalition has asked to be judged not just on its impact on the public finances, but also on the progress it makes in increasing social mobility.

Social mobility is undoubtedly an important issue. It can provide us with a measure of meritocratic advancement in the UK together with helping to reduce inequality. But understanding of what social mobility is and what it means for people’s life chances is still quite limited.

Nick Clegg’s stated focus is intergenerational social mobility – that is, the life outcomes of children compared to their parents. The literature on this is well-developed with economists such as Jo Blanden and Stephen Machin arguing that social mobility in terms of income level declined for those born in 1970 compared to those born in 1958. On the other hand, sociologists such as John Goldthorpe have questioned those findings stating that levels of mobility barely changed if people are measured by their social or occupational class.

However, social mobility also takes place within generations through career progression and earnings change – this is known as intragenerational social mobility. The evidence on this form of social mobility is not as extensive though Richard Dickens and Abigail McKnight have shown that earnings mobility for men fell during the 1980s and 1990s but picked up again from 2002 while women have generally experienced lower mobility with less variation over time. Contributions such as those by Dickens and McKnight, as well as others, are valuable but there is still no definitive answer as to whether or not it has become easier or harder for individuals and families to work their way up the ladder.

The Resolution Foundation will launch a major programme of research in the New Year designed to answer precisely that question. Our work programme will cover a range of areas to assess levels of persistence within income groups – why are some people consistently in the lower half of the income distribution? What are the characteristics of those that move up and down and those that have become stuck? Is mobility likely to be permanent or do people consistently end up back in their original position? Our work will not only assess individuals, we will also consider household income to see how family characteristics change mobility, if at all.

Our first paper, to be published early in the New Year, examines earnings change over the 1990s and 2000s and how levels of mobility have differed for two separate groups of people of similar ages. This paper allows us to answer questions about the effect of increased part-time working and gendered employment on earnings mobility. A follow-up paper will be published later in the year which tells us more about the characteristics of those that experience earnings mobility. These are all vitally important issues. They will tell us about the fairness of our society and our ability to provide the incentive for people to work hard. Even as the government focuses on reducing rebalancing the public finances, ensuring that those who were born poor can still prosper must remain central to their agenda.

These are all vitally important issues. They will tell us about the fairness of our society and our ability to provide the incentive for people to work hard. Even as the government focuses on reducing the national debt, ensuring that those who were born poor can still prosper must remain central to their agenda.