Social Mobility as an Income Inequality Determinant

Abstract

Abstract The paper focuses on the social mobility as the key driver of the income inequality. The aim of the paper is to contribute to the assessment of the social mobility and explore its links to the level of inequality and the age structure of the country. Employing composite social mobility indicator featuring benefit-of-the-doubt weighting principle, scores, ranks and benchmarks for 55 countries worldwide are determined by slack-based data envelopment analysis (DEA) reduced model. The proposed measure is compared to a regular Global Social Mobility Index (GSMI). Score and rank correlations reveal some significant differences although Denmark is robustly confirmed as a leader in social mobility worldwide. The suggested DEA-based approach proved more flexible as to determining benchmarks for underperforming countries. Second stage regression analysis reveals higher levels of income inequality for the countries of lower social mobility and with higher share of young people.