Tags Current Affairs

Issue

The World Economic Forum has come out with its first-ever Global Social Mobility Report, which has ranked India a lowly 72 out of the 82 countries profiled.

 

Background

The Nordic economies such as Denmark and Finland top the social mobility rankings while countries like India, Pakistan, Bangladesh and South Africa languish at the bottom.

 

Details

• Inequalities have been growing across the world. The rise of inequality has not only created massive social unrest but also adversely affected the global consensus on the kind of economic policies that countries follow.

• A good example of this is the rise of trade protectionism across the world over the past few years. Be it the United States or the United Kingdom.

• Several countries have started looking inwards in the hope that greater trade protectionism will help allay the fears and apprehensions of domestic workers.

Social mobility

• In economies such as China and India, economic growth can lift entire populations upward in terms of absolute income, but an individual’s status in society relative to others remains the same.

• Many situations exist where, despite high levels of absolute income mobility, relative social mobility remains low.

• The concept of social mobility is much broader than just looking at income inequality. It encompasses several concerns such as:

• Intragenerational mobility: The ability for an individual to move between socio-economic classes within their own lifetime.

• Intergenerational mobility: The ability for a family group to move up or down the socio-economic ladder across the span of one or more generations.

• Absolute income mobility: The ability for an individual to earn, in real terms, as much as or more than their parents at the same age.

• Absolute educational mobility: The ability for an individual to attain higher education levels than their parents.

• Relative income mobility: How much of an individual’s income is determined by their parents’ income.

• Relative educational mobility: How much of an individual’s educational attainment is determined by their parents’ educational attainment.

Importance of Social mobility

• Research has shown that in high-income countries, there is stagnation at both the bottom and the top end of the income distribution.

• For instance, in Denmark or Finland (which rank highest in social mobility index), if Person A’s parent earns 100% more than Person Z, it is estimated that the impact on Person A’s future income is around 15%, but in the US the impact is far more, about 50% and in China, the impact is roughly 60%.

• Social mobility levels can help us understand both the speed of how long it takes for individuals at the bottom of the scale to catch up with those at the top and how many steps it takes for an individual to move up the ladder in a given period  of social mobility.

• It would take a whopping 7 generations for someone born in a low-income family in India to approach mean income level while in Denmark it would only take 2 generations.

• Research also shows that countries with high levels of relative social mobility, such as Finland, Norway or Denmark, exhibit lower levels of income inequality.

Social mobility calculation

The WEF’s Global Social Mobility Index assesses the 82 economies on “10 pillars” spread across the following five key dimensions of social mobility:

• Health;

• Education (access, quality and equity, lifelong learning);

• Technology;

• Work (opportunities, wages, conditions);

• Protection and Institutions (social protection and inclusive institutions).