Low mobility across generations heightens job creation challenge

Mumbai: Inequality in opportunity is arguably more dangerous than simply inequality in incomes or wealth. There is growing consensus that diminishing scope for mobility within society is contributing to growing inequality in many developed nations, which in turn is arguably fuelling a wave of anti-establishment populism.

While the recent debate over economic stagnation and rise of populism has tended to focus on the US and Europe, it should not surprise us if India is gripped by similar politics in the coming years. Data suggests that upward mobility among the relatively poor in India remains low and has not improved in recent decades.

Available data from the India Human Development Survey, 2011-12, conducted jointly by the University of Maryland and NCAER, New Delhi, shows that there remains a high degree of correlation between the occupations of fathers and their sons.

Specifically, there is a one in three chance that a son born to a father who was either a farmer or an agricultural labourer or a construction worker moves out of these three occupations. In our analysis, even a job as a factory worker is counted as an improvement.

Despite such a low threshold, the probability for upward mobility is only around 33%. Moreover, this probability has not improved much for sons born in recent decades compared to those who were born in the 1950s, suggesting a high degree of stagnation in society. A similar analysis of women’s occupation patterns is not possible due to data constraints.

More worryingly, the scope for mobility does not appear to be too bright given the current employment scenario. The bulk of recent job creation has been concentrated in low-paying and insecure jobs in the informal sector, as discussed in Part 1 of the current series.

In other words, the economy is not creating enough regular jobs in the organized sector to absorb those who want to move out of agriculture or casual labour.

Thus, we see that 63% of the sons born in the 1980s to fathers in any of the three occupations—farmer, agricultural labourer or construction worker—continued to remain in the same occupation.

Such stagnation is also visible at the upper end of the spectrum.

Sons born to white-collar workers have a significantly higher chance of themselves landing a similar job. Those in white-collar jobs include teachers, doctors, engineers, managerial executives and other similar professions, as classified in a research paper by Mehtabul Azam, economist at Oklahoma State University.

Not much progress has been made in recent decades.

More worryingly, there is a danger that not much will change in the coming decades either.

An obvious solution to countering such inequality would have been to ensure quality education for all, hoping that it would improve the chances of those at the bottom of the ladder to move up. However, education levels too are influenced to a large extent by family history, as discussed in a previous Mint column.

More specifically, a son’s education level is impacted by the education level of his father. Additionally, it can be also said to be dependent on the father’s occupation.

To illustrate, consider the generation of sons born in 1980s. Data suggests that their education levels are in large part dependent on the occupation of the father.

More than 60% of sons who were born in the 1980s to teachers, engineers and other professionals were educated till at least the higher secondary level. However, this proportion is much lower, at 15%, for sons born to agricultural labourers or construction workers.

Thus, the challenge for policymakers in India is not only to create enough jobs now, but to ensure greater mobility within society in the coming years, in order to stave off potential social or political strife.

This is the concluding part of a two-part data series on India’s jobs situation. Part 1 had discussed the current employment situation with focus on the composition of jobs growth.