Lack of social mobility of people accentuates inequality in Latin America: CAF

The CAF, which is the Development Bank of Latin America, published the report “Inherited inequalities: the role of skills, employment and wealth in the opportunities of the new generations”, where it explained that intergenerational mobility not only has important consequences on the levels of inequality, but it can also affect the economic growth and the political-institutional stability of a country.

The report highlights that mobility opportunities are affected by different types of risks, which are not only associated with macroeconomic crises or the dangers of technological change, since in recent years there are also risks related to health, as has happened with the pandemic. of Covid-19.

“We know that Latin America is a very unequal region in many dimensions of people’s well-being, so that was the starting point for the study. Inequality in the region is one of the highest in the world, and it is also one that has been around for a long time. What we ask ourselves is what are the deep roots that make inequality persist and that despite the progress it has not been possible to reverse definitively”, said Dolores de la Mata, principal economist at CAF’s Directorate of Socioeconomic Research, The Economist.

The key factors impeding intergenerational mobility are the lack of opportunities to build human capital, obtain good jobs in the labor markets and accumulate assets.

In this sense, de la Mata explained that the most persistent face of inequality is low intergenerational mobility and that although there is good news in educational mobility, it is not enough so that in relative terms people with more disadvantaged contexts are better off how their parents were there.

Likewise, in Latin America, people who have more education do not necessarily get a better job, in order to obtain better income and therefore accumulate wealth.

The region has made a lot of progress in terms of educational coverage, allowing many people to achieve mobility by reaching higher educational levels than their parents, perhaps not necessarily in the quality of education, but very strong barriers are observed when it comes to the labor market,” said Dolores de la Mata.

In other words, people who have acquired more human capital than their parents do not necessarily perform better in labor terms, and the same occurs with the accumulation of wealth.

“The impossibility of having good jobs, which is one of the main sources of income and savings that people have, obviously also has an impact on their wealth,” de la Mata pointed out.

truncated links

For her part, Lucía Berniell, also CAF’s chief economist, commented to this space that in the study they found that the natural process of better jobs, better income and accumulation of wealth is truncated.

“What we found is that these links are also truncated. In Latin America, some educational mobility was observed, but it did not translate into better job opportunities. It is not just about understanding how much each of these three mechanisms contribute, but it is important to understand that the natural process that should occur does not occur in the region as it is observed in other regions of the world”, said Berniell.

Public policy

To alleviate the ravages of inequality in the region, CAF has suggested a series of public policy actions for Latin American countries.

For the accumulation of wealth, progressive and well-designed taxation of inheritance and transfers during life is proposed. While in the workplace it recommends the implementation of anti-discrimination policies based on race and ethnicity.

In the area of ​​human capital, it has proposed improvements in the offer (coverage, quality and relevance) of basic, technical-professional and higher education. As well as attention to habitat and accessibility to key facilities for the development of children and young people in the most segregated neighborhoods and most disadvantaged regions.

santiago.renteria@eleconomista.mx