This report was originally published 21 January 2016.

Summary

Australia has an international reputation as a nation that provides economic opportunity to people from low socio-economic (SES) backgrounds. However, in recent years, the divide between the richest and the poorest has been growing in many Western countries, and it may now be harder for someone born to low income parents to become economically successful later in life.

Intergenerational income mobility is a measure of economic opportunity that describes the relationship between a person’s income and the eventual income of their children. This Learning Curve summarises recent research on income mobility in Australia and the role played by the Australian education system.

Key Findings:

• Income mobility in Australia may be substantially lower than has been previously reported, and may be closer to low mobility countries such as the UK and US than to higher mobility countries like Sweden or Canada.
• Education plays a substantial role (25-40 per cent) in economic immobility between generations.
• Financial returns to education have been increasing in Australia, which increases the importance of ensuring equal access to education.
• The education system in Australia is about as equitable as the OECD average and the UK education system.
• Socio-economic status (SES) has more of an impact on educational attainment for females than males, and education explains a greater component of income immobility for females.
• Needs-based funding can improve educational equity, which can increase the mobility of Australian society.