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The world has experienced rising inequality over the last few decades. When rising inequality is balanced by improvements in the intergenerational mobility of disadvantaged children, it may not immediately raise an alarm. However, the available evidence indicates that intergenerational relative mobility¡ªthe extent to which a person¡¯s life chances are determined by that of her parents¡ªis stagnant or even getting worse. These dismal prospects for economic mobility have far-reaching implications for future economic development, social cohesion, and political stability. Policies and investments that can address the roots of economic immobility so that the talents and efforts of children are recognized and rewarded regardless of their parents¡¯ socio-economic status are more needed than ever.

In this Policy Research Talk, World Bank economist Forhad Shilpi will focus on intergenerational mobility in education in developing countries. In the first half of the talk, she will discuss methodological and conceptual issues, starting with the suitability of widely used measures of intergenerational mobility in the face of significant data limitations. To understand what policies can be adopted to address low mobility, one needs to know what drives the strong persistence between the economic status of children and parents. Shilpi will present a simple conceptual framework to highlight how the interaction between markets, schools, parents, social norms, and public policies results in intergenerational persistence.

In the second half of the talk, Shilpi will present empirical evidence from Indonesia and India that highlights the role of complementarities between the various factors in children¡¯s educational achievements. The study on Indonesia will present evidence on how education policy affects absolute and relative mobility in rural and urban areas, with a focus on understanding whether school quality is a substitute for or complement to parental investments. The study on India will explore the extent to which social norms and attitudes, parental nonfinancial inputs, and school environment explain the gender differences in intergenerational persistence.