Poor boy, rich man: Low income Aussie kids more likely than others to become high earners
Children born in lower-income Australian families have a good shot at improving their lot in life by international standards, but it’s getting harder for younger generations to earn more than their parents.
New government research shows Australia is on par with Sweden and streaks ahead of the US when it comes to income mobility.
The Treasury analysis, which drew on Australian income data from adults born between 1978‑1982 to see how that generation’s earnings compared to their parents, also foreshadowed a slowdown in income mobility between generations.
The proportion of young people earning higher incomes than their parents remains high but is starting to slip, with slowing productivity in developed nations contributing to dampening mobility between generations.
Declining student test scores could also weigh on economic mobility, both making it harder for children from lower-income families to break the mould and become higher earners as well as the entire cohort’s ability to outperform their parents.
Unaffordable housing and a lack of bus, train and other transport options could also depress income mobility by making it difficult for people to access better jobs, the analysis found.
Treasurer Jim Chalmers said Australia was performing well on social and economic mobility but could be doing better.
“We don’t want Australians’ prospects determined solely by where they’re born or who their parents are,” Dr Chalmers said.
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“The big ambition driving our government is to build a better future for Australians – and that ultimately means secure jobs and strong wages for this and the next generation.”
Australia remains a highly mobile country compared to the US in terms of incomes, with a child born in the bottom 20 per cent in Australia over 60 per cent more likely to reach the top 20 per cent than if born in the US.
Plus, the link between a person’s income and their parents income is less pronounced in Australia than in the US.
The report also revealed the sharp uplift in mobility in Queensland and Western Australia in the mid-2010s driven by the mining boom.
