Social mobility and the economy Oxera’s research for The Sutton Trust Dr Helen Jenkins Managing Partner 12 July 2017

Key questions What is the relationship between social mobility and the economy? How has social mobility in the UK changed over time?

What is social mobility? Focus on inter-generational mobility How is your achievement influenced by that of your parents? Mobility Immobility Parent time 1 Descendant time 2 1 2 3 4 5 Parent time 1 Descendant time 2 1 2 3 4 5

What did we find? The UK lags behind on social mobility How much more income does an individual earn if their father reached tertiary education? In the UK, the gap between the income of those whose father reached tertiary education (e.g. university) and those whose father did not is large Source: Oxera analysis using data from OECD (2010), A Family Affair: Intergenerational Social Mobility across OECD Countries, p. 188.

How does mobility affect the economy How does mobility affect the economy? Enables better matching of people to jobs Immobility leads to underutilised talent For example: educational opportunity may be limited for some recruitment processes may inadvertently filter out talented individuals— their talents are obscured Some potential candidates are obscured (e.g. filtered out of the application process) In a more socially mobile society, all candidates are visible and the best fit can be selected

What did we find? Modest increases in social mobility are associated with material increases in productivity—£39bn or £590 per person Social mobility is associated with better matching…. …and better matching of people to jobs increases productivity Long-term productivity gain (today’s prices) Using: new analysis of the relationship between social mobility and matching across Europe; and existing research on the link between matching and productivity we estimated the productivity ‘gap’ which is associated with low levels of social mobility £590 per person

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