Technology supports economic mobility

If you are born into a low-income family, you might think it a ‘no-brainer’ that the only way is up and that surpassing your parents wealth was easily achievable. Take a deeper look and economic mobility is a global issue which matters for fighting poverty, reducing inequality, and even for boosting growth.

Sadly, mobility has stalled in large parts of the world. The prospects of too many people are still too closely tied to their parents’ social status rather than their own potential, according to the findings of a new World Bank report. Mobility is also much lower, on the average, in developing economies than in high-income economies. The developing world accounts for 46 of the bottom 50 economies in terms of mobility in education from the bottom to the top.

Greater economic mobility leads to faster economic growth. It can also boost social cohesion and stability, with people living in more mobile societies likely to be more optimistic about their future.

Girls are outperforming boys

As we regularly read, girls are outperforming boys in rates of tertiary education and absolute mobility in high income countries, and the trend is in the similar direction in the developing world. In the not too distant future, girls’ progress in education mobility will outpace boys globally. However, challenges remain as women still lag in terms of wages and employment in most labor markets.

Policies and investments should act to reduce the gaps between the haves and have-nots in early childhood development and access to quality schooling. Countries with lower stunting rates for 5-year-old children tend to have higher educational mobility. Mobility is also higher in countries where more children are in school and receiving quality education during their primary years.

Policies increase worker protection

Having the right regulations and policies, including fiscal policies, can help increase income mobility and reduce the likelihood of poverty traps. Easing labor market access for disadvantaged and young people, improving competition among employers, and increasing the protection of workers against discrimination by race and gender can help equalise opportunities in the labor markets. Building a fair and progressive tax system can generate resources to finance progressive investments and help reduce the extent of income and wealth inequality, which is a key driver of low mobility in most societies.

Policies at the local level are important when it comes to equalizing opportunities. Where a person is born within a country matters for social mobility and opportunity. Local level policies right down to the level of communities and neighborhoods are crucial for breaking the cycle.

Technology supports economic mobility

Technology allows many things today that were inconceivable or impractical in the past. Using a smartphone or a tablet access to information has never been so freely available nor the supporting infrastructure of global finance.

Technology innovation can help drive social mobility. But that doesn’t happen in a vacuum. Real choices about resources, regulations, access — and even what we define as innovative — help or hinder. We have to drive innovation towards driving mobility.

By | 2018-05-11T11:27:01+00:00 May 11th, 2018|Financial, International|0 Comments