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Switzerland: High intergenerational income mobility, despite low educational mobility

Summary:
Patrick Chuard and Veronica Grassi of Univ of St Gallen in this voxeu research: Equal opportunities are not only ethically desirable but also important for economic growth, and one important facet is intergenerational income mobility. Using administrative data, this column documents intergenerational income and educational mobility in Switzerland. It finds that income mobility in Switzerland is high, but education depends strongly on parental income. It goes on to ask whether the country’s vocational training and education system might be the primary reason for this ‘high income, low educational mobility’ conundrum.  … Although we are unable to causally demonstrate that the VET system boosts intergenerational income mobility in Switzerland, several good arguments support such an

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Patrick Chuard and Veronica Grassi of Univ of St Gallen in this voxeu research:

Equal opportunities are not only ethically desirable but also important for economic growth, and one important facet is intergenerational income mobility. Using administrative data, this column documents intergenerational income and educational mobility in Switzerland. It finds that income mobility in Switzerland is high, but education depends strongly on parental income. It goes on to ask whether the country’s vocational training and education system might be the primary reason for this ‘high income, low educational mobility’ conundrum. 

Although we are unable to causally demonstrate that the VET system boosts intergenerational income mobility in Switzerland, several good arguments support such an effect. Apprenticeships incur almost no costs for parents. Some children even contribute small amounts to their family’s income during vocational training. Furthermore, VET is not the exception, but the rule. Even in the highest parental income ranks, almost half of children opt for the vocational track. Thus, VET is not stigmatised as in other countries, but widely accepted across the entire parent income distribution. The high acceptance and low costs of VET combined with many post-apprenticeship higher education options make children’s accumulation of human capital less dependent on parental income.

Of course, more research on the causal effect of VET on upward mobility is needed. If such research confirms a positive effect, countries with low intergenerational mobility should consider strengthening their VET system as a policy option.

Amol Agrawal
I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

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