Deborah A. Cobb-Clark
Globally, there is a widening divide in the wellbeing of people at the top of the socioeconomic ladder and people at the bottom. Australia has not been immune to these global trends. Although the exact level and trend in income inequality depends on the data source and measure considered, income inequality today is higher than it was in the 1980s, though there appears to have been little change since the mid-2000s. Rising inequality pulls the rungs of the socioeconomic ladder further apart, reducing social mobility by making it harder for disadvantaged Australian children to avoid becoming disadvantaged adults.
This article provides an overview of the Australian evidence on the extent to which socioeconomic disadvantage is transmitted from one generation to the next. While there is a large literature on the intergenerational transmission of education, occupation and social status, the focus here is on disadvantage as seen through the lens of income (earnings) and welfare receipt. The goal is to place the Australian evidence in the international context and identify key data and knowledge gaps.
The evidence shows that Australian parents pass some part of their social and economic position on to their children. In particular, the emerging Australian evidence hints at several key pathways through which intergenerational disadvantage may be occurring—for example, family structure, parental disability and labour supply decisions. Institutions are also important in shaping intergenerational disadvantage. Families, labour markets, public policy and the broader national context all interact to drive the extent to which children’s opportunities and outcomes depend on their family background. The way that social and economic policy is designed, delivered and paid for all matter for intergenerational mobility. It is crucial to translate the Australian evidence on intergenerational disadvantage into effective policy design.
September 26, 2019