Mendolia, Silvia Dr

The NSW Department of Education commissioned this research in 2015 in order to investigate the level of mobility in Australia, and to shed some light on the role of education. <br /><br /><p>Economic inequality has been the subject of debate for centuries, with research and analyses spanning from the code of Hammurabi, to the contributions of Plato and Aristotle, St. Thomas Aquinas, J.J. Rousseau, J.S. Mill, and many others. Nowadays, inequality is considered as one of the most urgent social problems. The President of the United States and the Managing Director of the International Monetary Fund Christine Lagarde have declared that tackling raising inequality is a top priority (Atkinson, 2015).</p><p>In debates on what can or should be done to address inequality, a key distinction is between equality of outcomes and equality of opportunities. Several political philosophers have discussed this distinction; including John Rawls, Robert Nozick, Amartya Sen, Ronald Dworkin, Richard Arneson, and G.A. Cohen .</p>Inequality (of outcomes) has been rising in most countries for around 30 years. Public opinion surveys suggest a lack of consensus on whether inequality of outcomes is desirable (Atkinson, 2015). This is probably because economic outcomes are partly a function of effort, talent and preferences for work versus leisure and many believe that some differences in economic rewards are justifiable (Atkinson, 2015).<br /><br /><p>Regardless of public opinion on its desirability, rising inequality has been linked to numerous instrumental concerns. In particular, there is evidence that rising inequality harms social cohesion, economic growth and, equality of opportunity.</p><p>The link between inequality of outcomes and opportunities has recently been studied intensely. Equality of opportunities is a concept frequently used in political speeches and public debates. Metaphors associated with this concept include “levelling the playing field” and “starting gate equality” (Roemer and Trannoy, 2013). Economic opportunities are partly determined by the circumstances of family background, such as parental education, occupation, marital status, region of birth – over which individuals have no control. Equality of opportunities is achieved when these factors do not play any role in achieving economic outcomes. Economists have engaged in debates around equality of opportunities for over three decades. Several empirical studies have estimated the extent to which opportunities are unequal in various countries (Roemer and Trannoy, 2013).</p><p>This study has analysed intergenerational mobility in Australia, and has generated new estimates of earnings elasticity using HILDA data. We have updated the estimates of Leigh (2007) by following the same approach but using considerably more data, yielding more precise estimates. </p><p>Our preferred estimate for the intergenerational earnings elasticity in Australia is 0.35, which is considerably higher than the estimate in Leigh (2007). Our higher estimate is consistent with Australia’s level of income inequality, and suggests that a 10 percent increase in father’s earnings is associated with a 3.5 percent increase in son’s earnings. This shows that Australia is not particularly mobile in an international context. It is less mobile than the Scandinavian countries, as well as Germany, Canada and New Zealand, but is more mobile than the United States and the United Kingdom.<br /><br />This research had a tremendous impact on the public opinion, and especially questioned the image of Australia as a very egalitarian country, where all individuals can have a real chance, despite of their background. Results from this research show that Australian mobility is only a bit higher than mobility in UK and US and that substantial policy interventions will be needed to increase the level of economic mobility for young Australians.<br /><br />Further, the second part of our research showed that education only explains 21-37% of the impact of family background of earnings, and therefore the majority of this link operates through other mechanisms, and the role of education is relatively small. <br />This research has important policy impact for policy makers who are interested in tackling inequality and providing true equality of opportunity for all young Australians<br /><br />References<br />Atkinson, A.B. (2015), Inequality: What Can Be Done?. Harvard University Press, Cambridge, MA.L<br />Leigh, A. (2007), ‘Intergenerational Mobility in Australia’, BE Journal of Economic Analysis & Policy, 7, 1–26.<br />Roemer, J. and Trannoy, A. (2013), ‘Equality of Opportunity’, in Atkinson, T., Bourguignon, F. (eds), Handbook of Income Distribution. North-<br />Holland, Amsterdam; 217–300.<br /><br /></p>

The NSW Department of Education commissioned this research in 2015 in order to investigate the level of mobility in Australia, and to shed some light on the role of education. <br /><br /><p>Economic inequality has been the subject of debate for centuries, with research and analyses spanning from the code of Hammurabi, to the contributions of Plato and Aristotle, St. Thomas Aquinas, J.J. Rousseau, J.S. Mill, and many others. Nowadays, inequality is considered as one of the most urgent social problems. The President of the United States and the Managing Director of the International Monetary Fund Christine Lagarde have declared that tackling raising inequality is a top priority (Atkinson, 2015).</p><p>In debates on what can or should be done to address inequality, a key distinction is between equality of outcomes and equality of opportunities. Several political philosophers have discussed this distinction; including John Rawls, Robert Nozick, Amartya Sen, Ronald Dworkin, Richard Arneson, and G.A. Cohen .</p>Inequality (of outcomes) has been rising in most countries for around 30 years. Public opinion surveys suggest a lack of consensus on whether inequality of outcomes is desirable (Atkinson, 2015). This is probably because economic outcomes are partly a function of effort, talent and preferences for work versus leisure and many believe that some differences in economic rewards are justifiable (Atkinson, 2015).<br /><br /><p>Regardless of public opinion on its desirability, rising inequality has been linked to numerous instrumental concerns. In particular, there is evidence that rising inequality harms social cohesion, economic growth and, equality of opportunity.</p><p>The link between inequality of outcomes and opportunities has recently been studied intensely. Equality of opportunities is a concept frequently used in political speeches and public debates. Metaphors associated with this concept include “levelling the playing field” and “starting gate equality” (Roemer and Trannoy, 2013). Economic opportunities are partly determined by the circumstances of family background, such as parental education, occupation, marital status, region of birth – over which individuals have no control. Equality of opportunities is achieved when these factors do not play any role in achieving economic outcomes. Economists have engaged in debates around equality of opportunities for over three decades. Several empirical studies have estimated the extent to which opportunities are unequal in various countries (Roemer and Trannoy, 2013).</p><p>This study has analysed intergenerational mobility in Australia, and has generated new estimates of earnings elasticity using HILDA data. We have updated the estimates of Leigh (2007) by following the same approach but using considerably more data, yielding more precise estimates. </p><p>Our preferred estimate for the intergenerational earnings elasticity in Australia is 0.35, which is considerably higher than the estimate in Leigh (2007). Our higher estimate is consistent with Australia’s level of income inequality, and suggests that a 10 percent increase in father’s earnings is associated with a 3.5 percent increase in son’s earnings. This shows that Australia is not particularly mobile in an international context. It is less mobile than the Scandinavian countries, as well as Germany, Canada and New Zealand, but is more mobile than the United States and the United Kingdom.<br /><br />This research had a tremendous impact on the public opinion, and especially questioned the image of Australia as a very egalitarian country, where all individuals can have a real chance, despite of their background. Results from this research show that Australian mobility is only a bit higher than mobility in UK and US and that substantial policy interventions will be needed to increase the level of economic mobility for young Australians.<br /><br />Further, the second part of our research showed that education only explains 21-37% of the impact of family background of earnings, and therefore the majority of this link operates through other mechanisms, and the role of education is relatively small. <br />This research has important policy impact for policy makers who are interested in tackling inequality and providing true equality of opportunity for all young Australians<br /><br />References<br />Atkinson, A.B. (2015), Inequality: What Can Be Done?. Harvard University Press, Cambridge, MA.L<br />Leigh, A. (2007), ‘Intergenerational Mobility in Australia’, BE Journal of Economic Analysis & Policy, 7, 1–26.<br />Roemer, J. and Trannoy, A. (2013), ‘Equality of Opportunity’, in Atkinson, T., Bourguignon, F. (eds), Handbook of Income Distribution. North-<br />Holland, Amsterdam; 217–300.<br /><br /></p>