Hidden talent: the economic benefits of social mobility

Social mobility is widely considered to be intrinsically good: decoupling an individual’s prospects from their social status or family background is a key pillar of fairness and social justice. This perspective has filled philosophy textbooks and opinion columns, but what is less well understood is the role that social mobility plays in boosting productivity and economic output.

Pro bono research conducted by Oxera on behalf of The Times Education Commission concludes that investing to increase social mobility offers unparalleled opportunities to raise a nation’s productivity.¹ Increasing UK social mobility even modestly, to the level that is average across western Europe, could increase annual GDP (in the long term) by £45bn, equivalent to £670 per person. These figures certainly make a strong case for policies that enhance social mobility, such as increased provision of Early Years education and funding to support higher education for those less able to afford it.

What is driving this relationship? Job matching. If society does not recognise in full the talents of its citizens, blinded by prejudices and social norms, it cannot utilise them. That means that socially suitable candidates are offered roles over more capable candidates, which is an (economically costly) missed opportunity.

Our recent analysis, an update of our original assessment for the Sutton Trust in 2017, updates our economic value estimates based on GDP in 2020.

Social mobility: what is it?

The Sutton Trust, a charity seeking to increase social mobility, defines the concept as the extent to which a child’s educational opportunities and life chances are determined by their parents socioeconomic background.² In a socially mobile society, an individual’s prospects are unrelated to their family background, while in a socially immobile society some education and employment opportunities may be open only to individuals from certain backgrounds.

Social mobility: how does it affect productivity?

Our research found that increasing social mobility is more than just a matter of social justice. Creating the opportunity for talent across the social spectrum to be recognised, developed and utilised can improve productivity.

One of the main reasons for this is that, in a society where education and employment opportunities are determined largely by an individual’s family background (rather than their capabilities), it is unlikely that people will be well matched to jobs (as some talent is underutilised). As employees whose skills match their jobs are likely to be more productive than those who are less well suited, socially mobile societies are likely to be more productive.

The figure below illustrates this—the best candidate (in the red jacket) is not fully visible in a socially immobile society (perhaps because they have been filtered out through some part of the application process or because they did not put themselves forward for the job in the first place).

Figure 1   Hidden talent

We looked at data on social mobility, job matching (measured as the match between the education of an employee and the ‘appropriate’ level of education for a post) and productivity from a range of European countries. We found that more socially mobile countries do indeed have a workforce that is better matched to jobs and a higher level of productivity.

Sizing the prize

Even a modest increase in the UK’s social mobility, such as increasing it to the average of western European countries, could raise GDP (in the long term) by around 2% through better job matching. This is equivalent to £45bn per year (based on 2020 GDP). This improvement would not be instant—it takes time for policies that increase social mobility to translate into improved job matching—but once achieved, it would be permanent.

Our estimate focuses only on the link between social mobility and productivity related to job matching. The prize is likely to be much larger if other ways in which social mobility influences productivity are accounted for.

Conclusion

Social mobility matters. Decoupling opportunity and upbringing can unlock the latent potential of high-aptitude individuals, enabling them to generate greater value in the economy. At a time when the UK is facing a productivity challenge, improving social mobility is not just a question of equity, but an economic imperative.

Oxera’s full original report for the Sutton Trust is available here.

This project is part of a programme of pro bono economics undertaken by Oxera. Another example of this is our analysis for young people’s homelessness charity Centrepoint on the impact of changing Universal Credit.

¹ Sylvester, R. and Woolcock, N. (2022), ‘Reinventing schools would boost Britain by £125bn a year, Times Education Commission finds’, The Times, 26 January.

² Sutton Trust, ‘About us’.