The American dream is much easier to achieve in… Canada

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How to solve social inequality in Latin America? 1:18

(CNN Business) - If you were born in the United States, having wealthy parents greatly influences your chances of success, according to a new study.

But, people born to low-income families have more options to buy a home, get a good education and experience a better life than their parents if they were born in Canada and not in the US. In other words: Canadians have a greater chance of achieving the American dream than Americans.

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This is indicated by the Global Social Mobility Index of the World Economic Forum, which classifies 82 countries according to the capacity of their citizens to reach their greatest potential, regardless of their socioeconomic background.

The report was published Monday to coincide with the start of the World Economic Forum in Davos, Switzerland, in which global income inequality is a recurring theme.

The index assesses the economies of countries in five dimensions: health, education, access to technology, work (in terms of opportunities, conditions and fair wages), and protection and institutions.

Germany is the country with the greatest social mobility among the members of the G7, reaching the 11th position in the general classification, followed by France (12), Canada (14), Japan (15), Great Britain (21), United States ( 27) and Italy (34).

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Nordic countries, such as Denmark, Finland, Norway, Sweden and Iceland, have the best social mobility scores.

Among the world's major emerging economies, Russia is ranked 39, followed by China (45), Brazil (60), India (76) and South Africa (77).

"The main finding of the report is that most economies are not providing the conditions for their citizens to prosper, often by a wide margin," the World Economic Forum said in a statement issued Monday.
"As a result, the opportunities in the life of an individual remain tied to their socioeconomic status at birth, consolidating historical inequalities," the statement added.

Wealthy parents

As the situation is now, in the United States it takes five generations for a low-income family to reach middle income, but that number could change. This statistic is better than that of Germany and France, but worse than Canada, Australia and Denmark, which has the best social mobility score in general.

In Denmark, a child born in poverty has a similar probability of obtaining a high income in adulthood than someone born in a rich family, according to the report. This is achieved thanks to a combination of widespread access to high quality education, good opportunities and working conditions, and a strong social security network.

Germany and France are much better than the United States in social protection and fairer wages, which raises the general classification of social mobility in those countries.

The report recorded that wage disparities have grown “exponentially” since the 1970s. 1% of those who receive more income in the United States earned 158% more in 2018 than in 1979, while 90% of those with less They earn income in the country, their salaries increased by just 24% during that period.

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Coming from a rich family also includes other benefits. Citing data collected by IPSOS on behalf of LinkedIn, the report notes that Americans who grew up in a high-income household are three times more likely to report that they have strong social and professional networks than those who grew up in a low-income household.

"This means that these people experience a double advantage in both social and financial capital," says the study.

Solve the inequality

Governments should implement policies to address the concentration of wealth, such as making personal income tax more progressive and restructuring tax sources, according to the report.

It also recommends improving the quality of education and promoting the development of skills throughout the working life of an individual. Helping workers make the transition to different types of employment in the context of technological change is another proposal.

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Companies must hire on a merit basis while paying fair wages and investing in improving their skills, the report says.

Inequality weakens a country's social fabric and erodes trust in institutions, according to Klaus Scwhab, founder and executive president of the World Economic Forum.

"The response of companies and the government must include a concerted effort to create new paths to socioeconomic mobility, ensuring that everyone has fair opportunities for success," Schwab said in a statement.

Davos Inequality World Economic Forum Inequity Social mobility