School closures are particularly damaging for children from already disadvantaged backgrounds; and the recession is likely to hurt young people starting out in the labour market. Widening educational and economic inequalities may increase the divide in life chances between rich and poor.
Social mobility – the relationship between parents’ and children’s living standards, and the extent to which parental background determines children’s later life outcomes – is shaped by economic and social conditions and educational opportunities experienced by successive generations. The crisis caused by the Covid-19 pandemic is exacerbating both economic and educational inequalities. Without government policies to improve prospects, the evidence suggests that social mobility levels may subsequently decline for younger generations.
What does research say about social mobility?
If inequality is low, economic growth is strong and the economy is becoming more productive, successive generations will, on average, enjoy higher living standards than previous ones. This is known as (upward) absolute mobility.
Economic crises have generational consequences. For example, in the wake of the 2008/09 global financial crisis, absolute mobility in the UK declined (see Figure 1). Wages are lower than they were a decade ago, while living costs are at historic highs.
Relative income mobility – the extent to which children’s adult earnings are independent of their parents’ earnings – has also decreased over time in the UK.
There is a stronger relationship between the earnings of parents and their children in the UK than in any other developed economy apart from the United States.
Some evidence suggests that recessions strengthen this relationship, particularly for disadvantaged families most at risk of suffering job losses during an economic downturn.
Figure 1: Percentage of children earning more than or equal to their fathers in the UK, 1995-2015
Source: What Do We Know and What Should We Do About Social Mobility? (Elliot Major and Machin, 2020)
What does the evidence tell us?
Perhaps the most salient evidence of how the current crisis might affect UK social mobility comes from the 2008/09 global financial crisis. Before the pandemic, real wages were still around 3% lower than they were in 2008; and between 2008 and 2015, the only OECD country to experience larger declines in real wages was Greece (Office for National Statistics, 2019; Costa and Machin, 2017).
Although the hit to jobs and pay from the global financial crisis was felt across the population (with the exception of pensioners), the young were disproportionately affected: workers aged 18-30 experienced higher unemployment and larger falls in real wages than any other group (Costa and Machin, 2017).
For new labour market entrants, evidence suggests that initial career progression is more difficult when the economy is weaker. Indeed, it has been shown that graduating into a recession has long-term negative impacts on employment, earnings, health, job quality and career progression, particularly for those who are low-skilled or come from low-income backgrounds (Oreopoulos et al, 2012; Cockx and Ghirelli, 2016; Liu et al, 2016; Schwandt and Von Wachter, 2019). Evidence, mainly from the United States, suggests that the long-term prospects for those who graduated around the Great Recession of 2008/09 have been similarly hurt (Altonji et al, 2016; Rothstein, 2020).
The slow recovery of real wages in the wake of the global financial crisis has received a lot of attention among economists, particularly as employment has recovered: sluggish productivity growth, the rise of insecure gig economy work, reduced employee power, and reduced willingness or inability to move between jobs have all been attributed a role (Haldane, 2018; Haldane, 2019).
Although it is difficult to identify causal links, it is clear that the global financial crisis altered the economy in ways that affected social mobility. While the nature of the current crisis is different, it will also change the economy significantly.
Much of the evidence on relative mobility in the UK compares the life circumstances of children and parents. Such comparisons suggest that, on average, up to 43% of an individual’s earnings will be determined by what their parents earned (Gregg et al, 2017). This is a considerably higher proportion than in Scandinavian countries, Finland, Germany and Canada; but it is lower than in the United States (Blanden et al, 2005; Björklund and Jäntti, 2009).
Figure 2: The Great Gatsby curve
Source: Elliot Major and Machin (2019)
In fact, each region within Norway and Sweden has considerably higher relative mobility than the UK, and very little variation geographically (Blanden et al, 2005; Bratberg et al, 2017). This is not the case in the United States, where regional variations in social mobility are large, and upward mobility is associated with less inequality and better social infrastructure (Chetty et al, 2014).
Evidence from the UK also points to regional disparities in social mobility. Looking at occupational wages, Bell et al (2019) find that mobility is lowest in ex-industrial regions and highest in London. Looking across countries, there is a strong correlation between inequality and relative mobility (see Figure 2).
In the UK, relative mobility has also decreased considerably over time (Blanden et al, 2007). This decline appears to have been driven by increasing educational inequalities. Between cohorts born in 1958 and the late 1970, the proportion of those in the richest 20% of families obtaining degrees has increased significantly more than those in the least well-off (Blanden et al, 2005).
The relationship between early life circumstances and attainment has also strengthened, with parents’ income and education levels explaining an increasing portion of the variation in important skills (Blanden et al, 2005; Attanasio et al, 2020). There is evidence that this relationship is further reinforced during recessions, as less educated parents in low-earning jobs are more likely to experience spells of unemployment, which have knock-on effects on their children’s attainment (Gregg et al, 2012).
Related question: How might the crisis affect children from poorer backgrounds?
Partial school closures during the Covid-19 crisis are likely to have widened education gaps (Elliot Major and Machin, 2020). Children in better-off homes benefit from more access to study space, computers and internet connectivity. Children living in low-income, often overcrowded, homes are more likely to experience stress that interferes with emotional health and learning. The danger for many disadvantaged pupils is that they suffer permanent ‘educational scarring’ – long-lasting negative impacts on life prospects.
Related question: What is the likely impact of remote learning on educational outcomes?
The emerging evidence is that the current recession will disproportionately affect young workers and those in low-paid jobs. The UK is already relatively immobile compared with other developed economies, and has struggled to recover living standards to pre-Great Recession levels over the past decade. Research into the impact of recessions on social mobility would suggest that more barriers to mobility will emerge as a result of the current recession.
Related question: How can we protect young people from being scarred by coronavirus?
What might be effective policy responses?
One response would be greater resources for the education system to compensate for disadvantage and any inequality in the impact of lost school time: Doyle et al (2009) discuss the lack of trade-offs in using early interventions to reduce inequalities.
Related question: How can we make up the learning losses in lockdown?
In addition, there could be greater emphasis on the pursuit of higher education among lower-income families after the pandemic: these children should not be further discouraged from pursuing education as a result of the pandemic. Pekkarinen et al (2016) chart social mobility in Norway in the 20th century and discuss the role of education.
Elliot Major and Machin, 2020 propose a number of policies including job guarantees for people facing long-term unemployment, a one-off progressive wealth tax, a national tutoring service to help children to catch up on the learning losses from school closures, and a levy for lifelong training.
Policies that continue to support attachment of workers to jobs, particularly in low-skilled low-paying occupations, would also be desirable. The Coronavirus Job Retention Scheme was implemented to achieve this goal, but the implications of winding it down for job losses must be considered. There is a large body of research evidence on the scarring effects of unemployment and the costs/benefits of labour market programmes (for example, Arulampalam et al, 2001).
Related question: How does the government’s furlough scheme work?
Support programmes will be needed to address what is likely to be a disproportionate impact of the recession on young workers and new graduates: increasing inequalities will temper mobility. Caliendo and Schmidl (2016) provide an overview of the effectiveness of youth unemployment polices across Europe in the wake of the global financial crisis.
Related question: What future for apprenticeships after coronavirus?
What more do we need to know?
There is evidence about the fall in mobility in the wake of the global financial crisis (as well as other historical crises), the impacts of recessions on the career mobility of the young, and how the links between parents’ and children’s earnings has evolved over time.
Given it is a generational concept, it is difficult to pin down cause and effect between policy and mobility. As a result, there is much less evidence on which to base any guesses as to how government policy might affect mobility in coming decades.
Crucially, we also do not yet know fully what will be the impact of the Covid-19 crisis on the economy and families. To evaluate the impact of the current recession on social mobility, we will first need to understand how this crisis will affect the economy as a whole. This will allow for some indication of what might constrain key drivers of mobility in coming years – growth, inequality and employment.
At the more individual level, we also have to understand how these economic and social impacts filter through to families. For example, has any increased unemployment or reduction in pay limited the resources of families to an extent that their children’s prospects are altered? Or have school closures increased inequalities in achievement?
What research is under way?
To increase our understanding of the impact of the Covid-19 crisis, researchers across the UK are working to gather evidence about how it will affect drivers of social mobility:
- The Office for National Statistics is collecting timely, experimental data on the social impacts of the pandemic and lockdown.
- Abigail Adams-Prassl, Teodora Boneva, Marta Golin and Christopher Rauh have a Covid Inequality Project, collecting and analysing data on the impact of the lockdown on individuals in the UK and the United States.
- The Institute for Fiscal Studies is tracking time-use of parents during the pandemic: see here for more information.
- Stephen Machin, Lee Elliot Major and Andy Eyles are starting a UKRI project: Generation COVID and Social Mobility: Evidence and Policy funding.
- The European Economic Association keeps track of current research on the impact of the Covid-19 crisis in a wide range of areas.
Where can I find out more?
Prepare for large wage cuts if you are younger and work in a small firm: Brian Bell, Nicholas Bloom, Jack Blundell and Luigi Pistaferri discuss how the Covid-19 crisis is likely to affect workers who are young and/or work in small firms.
COVID generation faces ‘dark age’ of low social mobility: A blog post explaining the main findings from Stephen Machin and Lee Elliot Major’s report, Covid-19 and social mobility.
The coronavirus and the next generation: Bart Cockx describes the likely implications for those graduating into the current crisis.
Do youths graduating in a recession incur permanent losses? Bart Cockx summaries his research on the impact of recessions on recent graduates.
Covid-19 will raise inequality if past pandemics are guide: Davide Furceri, Prakash Loungani, Jonathan Ostry and Pietro Pizzuto look at historical evidence of the impact of pandemics on inequality.
Children’s socio-emotional skills and the home environment during the Covid-19 crisis: Gloria Moroni, Cheti Nicoletti and Emma Tominey discuss the potential unequal impact of the lockdown on children’s skills.
Supporting parents and children in the early years during (and after) the Covid-19 crisis: Gabriella Conti writes about how the crisis might perpetuate early socio-economic inequalities.
Who are UK experts on social mobility?
- Jo Blanden
- Stephen Machin
- Paul Gregg
- Lindsey Macmillan
- Lee Elliot Major
- The Social Mobility Commission
- Resolution Foundation’s Intergenerational Centre.