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Economic growth in the developing world has lifted many out of poverty, but it has also brought rising inequality in its wake. This is perhaps most visible in the stunning fact that the world¡¯s most expensive single-family home, , is located in India, even though the average Indian household makes one tenth that of a US household. Without concerted policy action, the benefits of growth may well fail to generate broad-based equality of opportunity.

Historically, education has often been seen as the great leveler¡ªa mechanism that can allow even those from the poorest circumstances to succeed and climb up the socioeconomic ladder. But as a growing has shown, educational systems can entrench rather than weaken inequality. When highly educated parents are able to ensure their children benefit disproportionately, education systems pass on and strengthen advantages from one generation to the next.  

In a recent Policy Research Talk, World Bank economist Forhad Shilpi presented new evidence on the patterns of intergenerational educational mobility in several low-income countries. Her findings illuminate existing patterns of mobility between genders in rural and urban areas. She also presented a methodology to identify key barriers to equality of opportunity and point the way to more equitable education policy.

Researchers distinguish between two types of intergenerational educational mobility¡ªabsolute and relative. Absolute intergenerational mobility measures to what extent family background determines the educational attainment of a child irrespective of her academic ability and effort. Relative intergenerational mobility goes a step further and measures how many years of schooling a child from a less educated household would gain if she were born into a more educated household. According to Shilpi, this latter measure of mobility is central to understanding equality of opportunity, and her research therefore focuses primarily on this measure.

Before diving into her data, Shilpi laid out a framework for understanding the various determinants of children¡¯s educational outcomes (Figure 1). These include financial determinants, such as credit constraints and labor market returns to education, as well as non-financial determinants such as the role model effect of having educated parents.

Using this analytical framework, Shilpi and her co-authors explore patterns of intergenerational educational mobility across households at various levels of the socioeconomic ladder, rather than just averages across all households. This approach allowed for a more nuanced understanding of how educational mobility can vary between less and more educated households.

This approach led to a striking conclusion in the context of Indonesia¡ªgreater untargeted public investments in education can worsen relative educational mobility. Highly educated parents tend to invest disproportionately more of their resources into their children¡¯s education when schools improve, and they also tend to make more effective investments. Shilpi and her co-authors calculated that a ten percent improvement in schools across the board in rural Indonesia would lead to 1.5 more years of schooling for children of fathers with ten years of education, but nearly 2.3 years for children of fathers with fifteen years of education.

In on Bangladesh, Shilpi and her co-authors find that policies such as free primary schooling may not be effective because of corruption in schools. Wealthier households do not pay bribes for admission into ¡°free¡± public schools because of their bargaining power, while poor parents end up paying for their children¡¯s schooling.   

¡°Without well-designed policies, human capital can become one of the main mechanisms that transmits inequality through the generations,¡± said Shilpi. ¡°In countries with low mobility, policy makers should make smart investments so we can break the link between children¡¯s and parents¡¯ outcomes.¡±

Many mechanisms can help achieve this goal, from allocating more funds to stipends and conditional cash transfer programs targeted to poor households to improving access to schools through expansion of public schools in lagging areas. For example, on Indonesia¡¯s massive school construction program in the 1970s finds that it achieved a more equitable increase in educational attainment by enabling children, especially girls, from poor households to go to school.

Turning her attention to India, Shilpi finds that gender bias is important in understanding low educational mobility. Over the past few decades, India has achieved a significant narrowing of the gender gap in schooling outcomes for both rural and urban children. But despite these improvements in absolute mobility, the data suggest that relative mobility for girls is still low. In fact, Shilpi pointed out that relative mobility for girls in poor households in India is among the lowest for any country for which data is available.

Among the factors contributing to this low mobility are striking differences in parental investments between boys and girls. The average urban family invests 16.5 percent more in sons relative to daughters¡¯ education. School environment is another factor leading to skewed outcomes, with a lack of sanitation infrastructure placing a heavier burden on girls. Shilpi did highlight one bright spot, however: among urban families with highly educated parents, the role model effect of educated parents has helped eliminate the educational mobility gap between genders.   

¡°Social norms are important,¡± said Shilpi. ¡°The gender biases that we see in patrilineal states in India are rooted in social, cultural, and religious norms. In this case, we see that parental education can counter that gender bias to some extent.¡±

While this new body of research provides a more robust understanding of the drivers of relative educational mobility, better data is needed to give a complete account. But in the meantime, Shilpi¡¯s key conclusion is certain¡ªmore targeted investments in disadvantaged households are needed to achieve true equality of opportunity.