Australia among the best for generational income mobility but poverty endures
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The news: Most Australians are not strictly limited in their income opportunities based on their parents’ earnings but those born into poverty are less likely to move out of the bottom end of the wealth spectrum, according to a new report from the Productivity Commission.
The numbers: Australia is average in terms of income inequality but it has among the best global ranking in the world for income mobility across generations, sitting alongside Switzerland, Sweden, Denmark, Canada and Norway.
The report looked at economic mobility in Australia and about 67% of Australians born from 1976 to 1982 earned more than their parents at an equivalent age.
However, those with parents earning in the top and bottom 15% of incomes are far less likely to move up or down the scale, raising concerns about those born into poverty.
Wealth mobility is “stickier” than income mobility. When adjusted to take wealth into account, over 40% of those measured in the top or bottom of the income spectrum in 2001 remained within these categories in 2022.
The context: Economic mobility is a significant measure of opportunity and wellbeing.
There are growing concerns about those stuck in the cycle of poverty, with one in 10 experiencing extreme low income in the five years to 2022. Those living remotely, those who do not speak English at home, single parents and migrants are among the most at risk.
Children growing up in homes receiving government support are twice as likely to be require government support as adults.
Education opportunities are considered one of the most critical elements to improving economic mobility. The report found those with a Bachelor’s degree or higher earn 23% more than those who complete year 12 and do not study further.
What they said: “On top of [the sticky effect of wealth] cost of living pressures and rising property prices mean higher earnings may not afford you the same standard of living and access to wealth as they have in the past,” said Productivity Commission chair Danielle Wood.
“Australia really has been the ‘land of the fair go’ for many, but we can’t ignore what’s happening for people in poverty.
“Policymakers should make sure support is targeted to where people need it most.”
The source: Productivity Commission research paper
