The Welfare Effects of Social Mobility

The question whether a socially mobile society is conducive to subjective well-being (SWB) hasrarely been investigated. This paper fills this gap by analyzing the SWB effects of intergenerationalearnings mobility and equality in education at the societal level. Using socio-demographic information on44 000 individuals in 30 OECD countries obtained from the World Values Survey, this study shows thatliving in a socially mobile society is conducive to individual life satisfaction. Differentiating betweenperceived and actual social mobility, we find that both exert rather independent effects, particularly in theirinterplay with income inequality. We identify a positive interaction of perceived social mobility thatmitigates its overall SWB lowering effect, supporting Alesina et al. (2004). In contrast, a high degree ofactual social mobility yields an overall impact of income inequality that is SWB lowering, while for lowsocial mobility the effect of inequality is positive. These interactions hold stronger for pre-transfer thanpost-transfer income inequality. Actual social mobility appears to be appreciated only by conservativepersons, while leftist oriented individuals are indifferent. Robustness is tested using a world sample.