Challenges for Upward Social Mobility in Latin America and the Caribbean

Inequality rates in Latin America and the Caribbean are among the highest worldwide. Inequality is not only present in the income disparity of people, but also in other dimensions such as education, land tenure or job opportunities. This impacts on economic growth rates and political-institutional stability, and conditions social mobility throughout the region.

According to the EDR 2022, published by CAF—development bank of Latin America—, the expansion that took place throughout the twentieth century in areas such as education was not enough to improve the relative situation of the children of parents with lower educational attainment in Latin America and the Caribbean. In fact, the fraction of children of parents with no college education who complete their studies is only 10%. However, this percentage of people does not necessarily achieve similar progress in job opportunities.

While the richest 10% in the region hold 55% of the income and 77% of all wealth, the poorest 50% earn 10% of the income and hold only 1% of the wealth.   This inequality is passed down from generation to generation. Lack of opportunities for building human capital, securing good jobs in labor markets and accumulating assets are all key factors behind intergenerational inequalities.

The EDR, which has been published annually since 2004, seeks to establish lines of analysis that promote the creation of fairer, more sustainable societies, in line with our goal of becoming the green bank and the economic and social recovery of the region. This mission implies that over the next five years we will mobilize USD 25 billion in green operations, and that our green portfolio will rise from 26% today to 40% by 2026.  

This year’s report uses a range of long-term metrics and variables to explain intergenerational mobility in the region, and analyzes people’s educational, occupational, income, health, and wealth mobility according to their socioeconomic backgrounds, as well as opportunities for human capital formation, access to high-quality jobs, and asset accumulation over life.

The articulation of agendas linked to intergenerational mobility has the potential to improve all socioeconomic indicators in the region. Therefore, CAF works on a series of pillars based on social welfare with a focus on equality, inclusion and diversity, boosting productivity, internationalization and sustainable finance, and the development of ecosystem services that prioritize biodiversity. These pillars also include the creation of physical and digital infrastructure for regional development, the formation of resilient, sustainable territories and the energy transition.  

The creation of more and better opportunities for different generations requires cross-cutting actions that involve public policy makers, but also companies, multilateral banks and civil society. The future of Latin Americans and Caribbeans depends on the measures and interventions that are advanced today in favor of social mobility and growth, the reduction of inequalities and the creation of more opportunities for all.