Intergenerational Mobility and Wage Inequality across OECD countries

This paper investigates equality of opportunity which is reflected in intergenerational mobility, i.e. the extent to which family background plays a role in determining adult socio-economic outcomes across 11 core OECD countries. Based on the cross-nationally comparable Programme for International Assessment of Adult Competencies (PIAAC) and International Adult Literacy Survey (IALS) datasets that allow the estimation of cross-country relationship between parents' education levels and children's education, competency skill levels and wages, this paper shows that parental education plays a significant role in determining children's socio-economic outcomes in all countries. However, there is significant variation in the strength of this relationship across countries.

Previous empirical research revealed that higher income inequality is related to lower intergenerational income mobility, and this analysis confirms a strong negative relationship between intergenerational social mobility and wage inequality across OECD countries. Additionally, by clustering countries according to Esping-Andersen classification of welfare state regimes (1990), this paper shows that intergenerational mobility and wage inequality differ significantly across three different welfare state regimes. This is extremely important, since right public policy mix could potentially lead to greater equality of opportunity and consequently to higher equality of outcome.