The social elevator in Spain: an analysis of intergenerational income mobility

The growth of income inequality in advanced economies has raised great public concern about a possible deterioration in equality of opportunity. In particular, intergenerational mobility is one of the ways of measuring equality of opportunity: the greater the intergenerational mobility, the less an individual’s economic or social success depends on the socio-economic status of their parents.

This Policy Brief presents a thorough and detailed study of intergenerational income mobility in Spain based on microdata from the Atlas of Opportunities, expanding on the initial analysis by Llaneras, Medina and Costas (2020). The study focuses on Spanish children who reached adulthood (between 30 and 36 years old) in 2016. It addresses both relative mobility (“the income difference between the children of rich and poor families when they are adults”) and absolute mobility (“the extent to which children from a specific social background are better off than their parents when they are adults”).

The results show that Spain’s social elevator lies somewhere between countries with high intergenerational mobility, such as Australia or Switzerland, and those with low mobility, such as the United States or Italy. In particular, parents’ income has a strong influence on the income their children will have in the future, especially at the highest levels of the income distribution: the children of the top 1% end up with an average income more than €20,000 higher than those of a family at the median (50th percentile) of the distribution. Moreover, 1 in 10 members of the top 1% of earners come from parents who were already in the top 1%, but fewer than 4 in 100 come from families that started in the poorest 10%: it is therefore 24 times easier to end up in the top 1% coming from the highest percentile than coming from the lowest decile.

Compared with the initial work by Llaneras et al (2020), the study makes three contributions:

1. In Spain, there is clearly a Great Gatsby curve at territorial level. The region with the highest level of absolute and relative mobility is Catalonia, with mobility rates on a par with Scandinavia, while the regions with the lowest levels of absolute and relative mobility are Andalusia and the Canary Islands, with absolute mobility similar to that of the southern United States. More importantly, the higher the initial level of income inequality, the lower the absolute intergenerational mobility, suggesting that structural inequalities are a barrier to a functioning social elevator and confirming the existence of a Great Gatsby curve in Spain.
2. Girls have systematically lower intergenerational mobility than boys:
   1. Girls who grew up in households with national average incomes end up, on average, in the 46th percentile, while sons from those same families reach the 52nd percentile.
   2. Of sons born into the poorest quintile, 15% reach the richest quintile, compared with 10% of daughters. At the same time, the percentage of children born into the richest quintile who end up rich is higher for men (36%) than for women (30%).
3. Internal migration favours intergenerational mobility. The vast majority of children who leave their province of origin migrate to richer provinces, pointing to economic motives, which are also independent of parental income: in fact, it is the children of lower-income families who benefit most from internal migration.

In light of the available evidence, we believe there are at least two policy lines to promote intergenerational mobility that should be explored in the case of Spain:

1. Investing differentially in education in territories with low intergenerational mobility. In Spain, educational outcomes are strongly associated with social background.
2. Committing to policies that facilitate the free geographical mobility of lower-income families to reduce the intergenerational persistence of poverty.