Social harms - Social Mobilty
Image by Raphael Whittle
How can extreme wealth harm social mobility?
The increasing share of wealth held by a small elite and the growing levels of wealth of the 'super-rich' can hinder the ability for upward mobility among those who are not extremely wealthy - as well as creating 'sticky ceilings' that allow the extremely wealthy to hold their advantaged position, in terms of their ability to accumulate further wealth, earn high incomes, obtain high status and dominate top professions. This can foster a "vicious cycle" where advantages are inherited and the paths for upward advancement narrowed for others.Summary
| Certainty of evidence | Strength of relationship |
|---|---|
Moderate - strong:Evidence is associational and mechanism-based rather than causal. Strong evidence of 'sticky ceilings', especially at the very top of the wealth distribution. Strong consistent evidence of the mechanisms that connect high levels of wealth to lower social mobility, including contextual differences across countries. |
Strong:There is a strong intergenerational transmission of advantages connected to high levels of wealth and these are in fact stronger when considered across multiple generations. There is also evidence that these dynamics are becoming stronger in recent years. |
Relationship between wealth and social mobility is non linear. The literature consistently finds marked steepening at the top (e.g. top 10%) but also some emerging evidence that the starkest 'sticky ceilings' are among the ultra rich (top 0.1% / top 100 individuals).
- Financial market structures and regulation shape opportunities for wealth accumulation, investment returns and wealth preservation
- Taxation of wealth, inheritances and capital gains influences the intergenerational transmission of wealth
- Education systems affect the extent to which wealth can be converted into educational and labour-market advantage
- Housing markets and residential segregation shape access to opportunity-rich neighbourhoods and local resources
- The degree of wealth concentration and overall inequality may influence the scope for opportunity hoarding and the persistence of advantages across generations
- A precise threshold at which extreme wealth becomes socially harmful for social mobility is not found
- Evidence is strongest on sticky ceilings and the persistence of advantage among the wealthy, rather than on how extreme wealth affects the mobility prospects of less-wealthy groups
- More research is needed on how contextual factors and institutional regimes moderate wealth-mobility relationships across countries - e.g. how they steepen wealth gradients at the top and reinforce rank persistence,
- Limited evidence on the role of wealth (rather than income) inequality in generating opportunity hoarding and mobility barriers
- Evidence remains concentrated in the US and a small number of European countries, with limited evidence from developing economies
- Adermon, A., Lindahl, M., & Waldenström, D. (2018). Intergenerational wealth mobility and the role of inheritance: Evidence from multiple generations. The Economic Journal, 128(612), F482-F513.
- Chetty, R., Friedman, J. N., Saez, E., Turner, N., & Yagan, D. (2020). Income segregation and intergenerational mobility across colleges in the United States. The Quarterly Journal of Economics, 135(3), 1567-1633.
- Chetty, R., Deming, D. J., & Friedman, J. N. (2026a). Diversifying society's leaders? The determinants and causal effects of admission to highly selective private colleges. The Quarterly Journal of Economics, 141(1), 51-145.
- Fernholz, R., & Hagler, Y. (2023). Rising inequality and declining mobility in the Forbes 400. Economics Letters, 230, 111257
- Krutikova, S., Macmillan, L., van der Erve, L., & Sturrock, D. (2024). Intergenerational mobility in the UK. Oxford Open Economics, 3(Supplement_1), i684-i708.
- Palomino, J. C., Marrero, G. A., Nolan, B., & Rodríguez, J. G. (2022). Wealth inequality, intergenerational transfers, and family background. Oxford Economic Papers, 74(3), 643-670. https://doi.org/10.1093/oep/gpab052 [academic.oup.com]
