In this article, we will look at the 15 countries with the highest economic mobility in the world. We will also shed light on social mobility efforts of some companies. If you want to skip our detailed analysis, head straight to the 5 Countries With the Highest Economic Mobility in the World.
There are certain aspects of life that are beyond human control. When, where, and to whom you are born, is one such example. The innate stratification of classes within this world is yet another reality of life that determines to some extent most people’s journey on earth. However, we build our lives on the premise that not everything is predestined and hard work and dedication can play a significant role in goal achievement. It is this drive then that propels people to continuously improve themselves, whether it be to move up the socioeconomic ladder or some other loftier objective.
Economic mobility can be defined as the ability of people to upgrade their economic status over time. The concept of inter-generational move to a higher income bracket is especially relevant here. Nevertheless, the question that demands further clarification is that, can simply a desire for elevation to an upper class be enough? There are numerous other factors that must be accounted for before this objective is accomplished, thereby, rendering it with complexities that the world is still unraveling. Globally, people have been seen tethered to their parent’s status and we find developed countries with higher economic mobility as compared to developing, low-income nations. Some of the countries found at the lower end of social mobility spectrum include Cote d’Ivoire, Cameroon, Pakistan and Bangladesh.
Furthermore, while richer economies are associated with higher economic mobility, this is not set in stone. Certain welfare states like Sweden, Norway, and Denmark etc. provide their citizens with many amenities of life with little or no cost as well as equal opportunities in education. They have low-income inequality and therefore, are among countries with high economic mobility. Interestingly, the United States — a welfare state with an impressive economy — has low social mobility as compared to other developed countries. Raj Chetty’s probing research in understanding low economic mobility for the US brings to the forefront the fact that there is much geographical dispersion within the country.
This was found to be especially true for children from poor households. The government, however, is aware of the need for constant efforts for uplifting the socioeconomic status of their people. The DollarWise Economic Mobility Campaign has distributed grants for economic and health well-being to their cities for a long time and continues to do so. It has also been ascertained that some factors like education, household structure, and savings can have an impact on economic mobility of the Americans.
Humanity is grounded in the idea of equity between people and though the efforts for better social mobility definitely satisfies this condition, there are multifarious economic benefits that can be accrued as well. The World Economic Forum stipulates that a 10-point increase in the Global Social Mobility index of countries could lead to a potential $514 billion increase in global GDP.
Is Socioeconomic development a purely government-level agenda?
Given the stress on economic and social mobility development, many companies are also playing their role, apart from the government. This includes big companies like Ford Motor Company (NYSE: F), Microsoft Corporation (NASDAQ: MSFT), IBM (NYSE: IBM), and Amazon.com Inc. (NASDAQ: AMZN).
Ford Motor Company (NYSE: F), has established Ford Motor Company Fund that collaborates with non-profit firms to help disadvantaged people in various communities. For example, the Ford Resource and Engagement Center in Craiova, has only recently accepted 8 new entrepreneurship programs. These are supposed to provide employment opportunities for young people. Ford Motor Company (NYSE: F) has also used the fund to invest $5 million in transportation for Detroit and other US cities. The aim is to ensure transportation for people who lack the facility, thereby, positively impacting their economic opportunities.
Microsoft Corporation (NASDAQ: MSFT) and IBM (NYSE: IBM) have been known to spend millions in the education system. One of IBM’s (NYSE: IBM) program, called SkillsBuild, is a free education program aimed at tech-low communities. This would allow them a chance to learn and develop technological skills and thus, help land better jobs. Microsoft Corporation’s (NASDAQ: MSFT) YouthSpark Program is also a praiseworthy effort for building educational and career possibilities for children around the world.
Amazon.com Inc. (NASDAQ: AMZN) is also not behind other companies in promoting economic mobility. Chosen as one of the top 75 UK employers for the Social Mobility Employer Index 2023, they provide ample evidence of their serious attitude towards fostering an equitable and progressive environment. 85% success rate of Amazon.com Inc. (NASDAQ: AMZN) apprenticeship program as well as The JOBS Project and Career Choice are some of the examples that they can boast.
15 Countries With Highest Economic Mobility In The World
Methodology
To list the countries with the highest economic mobility in the world, we have taken two different metrics. Firstly, we used our list of 15 countries with the highest social mobility in the world. Secondly, we used the latest Heritage Foundation Economic Freedom Index, 2023. The idea is that easier access to economic opportunities would allow people to attain a better living standard, thereby, allowing them to move up the ladder.
We then took the rankings of each country from both these lists and averaged them and then ranked our final list based on those average rankings. The list is presented in descending order.
Please note that in the case of similar average ranks, a country with a higher social mobility index ranking was placed higher.
Note: The US’s huge levels of income inequality prevented it from making it to the list. However, apart from that, the country is known for robust economic infrastructure and there are few regulatory obstacles to entrepreneurship.
By the way, Insider Monkey is an investing website that uses a consensus approach to identify the best stock picks of more than 900 hedge funds investing in US stocks. The website tracks the movement of corporate insiders and hedge funds. Our top 10 consensus stock picks of hedge funds outperformed the S&P 500 stock index by more than 140 percentage points over the last 10 years (see the details here). So, if you are looking for the best stock picks to buy, you can benefit from the wisdom of hedge funds and corporate insiders.
Here is a list of the countries with the highest social mobility in the world.
15. Belgium
Social Mobility: 10
Economic Freedom Index: 43
Average Rank: 26.5
The Belgium government, for long, has adopted a model that aims at redistribution and timeless unemployment benefits strategy. What is an even more dedicated effort on their part for ensuring well-being of people at all times, is the indexation wages and pensions with inflation. In fact, the government has recently enacted reforms to enable pensioners to life a sustainable lifestyle. In addition, their excellent healthcare system as well as the early retirement option, are both indicative of the government’s desire to facilitate a prosperous lifestyle. Such measures are bound to have a positive impact in inter-generational economic mobility as well as social mobility. Their free open market policies encourage international trade and investment, thereby, provide opportunities for growth. Thus, it is no wonder that Belgium is one of the countries with the highest economic mobility in the world.
14. Austria
Social Mobility: 9
Economic Freedom Index: 23
Average Rank: 16
While Austria has fallen short in certain aspects of social mobility scale, as compared to other OECD countries, their overall performance still earns them a place on the list of countries with the highest social as well as economic mobility in the world. They have low income inequality. Their early childhood education rate has been on the rise and they also provide targeted support for children struggling in education — an established indicator for economic mobility. Moreover, their tax and benefit system is strong, cushioning people against sudden income shocks. Recent “long-term care” plan, provides further evidence of their commitment to ensuring a prosperous life for their people. On top of this, their attitude towards maintaining rule of law and transparent as well as competitive business environment, has also brought them to the 23rd place in the economic freedom index. Therefore, we find them among the 15 countries with the highest economic mobility in the world.
13. Canada
Social Mobility rank: 13
Economic Freedom Index rank: 16
Average Rank: 14.5
Canadian society is one of the most socially mobile in the world, both within and across generations. In fact, they are twice more socially mobile than the US. They are also ahead of United Kingdom. Research over the years have established that a child’s future in Canada is not linked to the financial status of their parents. 35% of their citizens have achieved a higher strata than their parents, depicting a clear trend towards economic mobility. Furthermore, strong rule of law, supporting environment for property rights, and proper implementation of commercial code, sustains a free economic situation in the country. Combined, these factors make Canada one of the countries with the highest economic mobility in the world.
12. Australia
Social Mobility rank: 11
Economic Freedom Index rank: 13
Average Rank: 12
While Australians have been identified with a fairly higher chance of inter-generational economic mobility as compared to other countries, the Treasury researchers are pessimistic about the future. Children born in the bottom fifth of the Australian households, have a 12.3% chance of moving up to the top five, in terms of income. However, this is still quoted as a 60% higher probability than that found in the US. Findings of a Treasury research report pointed to strong labor markets as a potential driver of economic mobility. Queensland and Western Australia were seen to depict this trend in the wake of the boom experienced by the mining industry. The economic freedom index also places Australia at a good place in the world ranking. Therefore, our average considers the country as one of the countries with the highest economic mobility.
11. Iceland
Social Mobility rank: 5
Economic Freedom Index rank: 19
Average Rank: 12
Iceland is commended for various policies that center on equality and human rights protection. Their family policy, low gender disparity, low housing cost, technological reach, and internet freedom, are among the few that help label them as a highly progressive society. Combine this with an open-market system that fosters trade and investment, and you get one of the countries with the highest economic mobility in the world.
10. Germany
Social Mobility rank: 8
Economic Freedom Index rank: 14
Average Rank: 11
According to OECD, Germany has lower social mobility than other developed countries. Children of high-income households have a 50% chance of graduating high school, as compared to children born in low-income households. Researchers have also found that while mobility has been constant for the recent birth cohorts, there is substantial variation across regions within the country. The world ranking for Economic freedom Index has the country on the 14th place. They have an open-market policy and along with law and order supremacy, they enjoy a robust economy. Thus, these factors coupled together, we find Germany at the 10th position on our list of 15 countries with the highest economic mobility in the world.
9. New Zealand
Social Mobility rank: 15
Economic Freedom Index rank: 5
Average Rank: 10
New Zealand is a strong advocate of fair women representation at all job levels. The government supports mitigation of gender disparity and their top public service positions have been more than adequately filled by women. Furthermore, they engage in policy making that ensures economic growth of the low-income population in the country. This is evidenced by the Recognized Seasonal Employer (RSE) Scheme, which has directly contributed towards higher living standards. Furthermore, with a strong, stable economy and compliance with rules and regulations, New Zealand has quite an impressive economic freedom index ranking, making them stand out as an economically mobile society.
8. Luxembourg
Social Mobility rank: 12
Economic Freedom Index rank: 7
Average Rank: 9.5
The Global Social Mobility Report, 2020, ranks Luxembourg at the 10th position. Not only does the country excel in the health sector, they are also performing well in the education quality and equity aspect. Furthermore, the country’s intolerance towards corruption has nurtured an environment of transparency that encourages investment, open-market behavior, and entrepreneurship. Thus, it is no wonder that they make it to the list of the countries with the highest economic mobility in the world.
7. Ireland
Social Mobility rank: 14
Economic Freedom Index rank: 3
Average Rank: 8.5
Ireland has recognized the necessity of educational uplift in order to promote and sustain social/economic mobility. A recent annual Diversity and Inclusion (D&I) conference brought many organizational leaders to the forum. Almost all of them were found to be keenly involved in pursuing educational programs that would foster social mobility. The country is also aware of the link between economic prosperity and social uplift. Therefore, they have formed an open-market, globally competitive, business and trade model that is bolstered with strong institutional performance.
6. Finland
Social Mobility rank: 4
Economic Freedom Index rank: 11
Average Rank: 7.5
Finland has been enjoying a top ranking on the Global Social Mobility Index for a while now. This is mainly credited to high income mobility. They have world top class educational system — based on the inclusive education policy. It is also one of the most gender and income equal countries in the world. The cherry on the top is their social protection coverage. To the already awe inspiring list can be added the economic freedom maintained by the country. This should then not come as a surprise that Finland is one of the countries with the highest economic mobility in the world.
Click here to see the 5 Countries With the Highest Economic Mobility in the World.
Suggested Articles:
- 15 Strongest Currencies in the World in 2024
- 15 Richest Countries that Pay You to Move There
- 30 Countries With Best Universities In The World
Disclosure: None. 15 Countries With the Highest Economic Mobility in the World is originally published on Insider Monkey.