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This government, alongside most of its predecessors, is concerned about social mobility. A society in which one's prospects are largely or wholly determined by chance of birth is not one with which many will feel comfortable. But any strategy to increase social mobility must be long term, multi-faceted and cautious in its claims.
As the coalition government prepares to launch its own strategy for tackling social mobility, recent work at IFS exploring the literature on social mobility has highlighted some important conclusions that the government would be wise to bear in mind.
First, countries with higher income inequality tend to have lower social mobility (at least when using income-based definitions of mobility). In an unequal society there is further to travel to get from the bottom to the middle or the top. The UK has relatively high income inequality and low social mobility. It is therefore likely to be very hard to increase social mobility without tackling inequality.
Particularly in a context of high levels of inequality such as that in the UK it is important to be clear what one is trying to achieve through increased social mobility. It is obvious that pursuing relative social mobility implies downward mobility for individuals from rich/middle income families. In a world in which the consequences of downward social mobility are significant, there will be many who find this mobility very uncomfortable.
It also matters whether the government is more concerned about improving the mobility of the most disadvantaged or those somewhat further up the social spectrum. Policies aimed at improving the mobility of the most disadvantaged or the least skilled can be very costly. In part this is because the UK labour market appears to be "hollowing out", by which we mean there are increasing numbers of high skill and low skill jobs, and fewer in the middle. So it may be harder and more costly to help those at the very bottom than it will be to help those somewhat above the bottom. Any comprehensive social mobility strategy is likely to want to deal with both of these groups and may need to treat them quite differently.
One set of interventions which we know are important are those aimed at very young children, as the recent Field Review and Allen Review have highlighted. But it is equally important to understand that they will never be enough by themselves. The evidence is clear that early investments are most productive if they are followed up with later investments. Important findings in this area are that:
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Cutting the deficit: three years down, five to go?
The UK is in the fourth year of a planned eight-year fiscal tightening. Following further announcements made in Budget 2013, this fiscal consolidation is now forecast to total £143 billion by 2017–18. The UK is intending the fourth largest fiscal consolidation among the 29 advanced economies for which comparable data are available. By the end of this financial year, half of the total consolidation is expected to have been implemented. However, within this tax increases and cuts to investment spending have been relatively front-loaded, while cuts to welfare spending and other non-investment spending have been relatively back-loaded.
The March Budget forecast that borrowing would fall by £0.1 billion from £121.0 billion in 2011–12 to £120.9 billion in 2012–13. On Tuesday, the Office for National Statistics is due to release its first estimate of public sector net borrowing in March 2013 and, therefore, for the whole of 2012–13. Borrowing could easily end up being higher or lower than it was in the previous year, either due to backwards revisions, the uncertainty inherent in forecasting borrowing even a month in advance, or both. However, whether borrowing is slightly up or down in cash terms is economically irrelevant. Either way, the bigger picture is that having fallen by roughly a quarter between 2009–10 and 2011–12, borrowing is forecast to be broadly constant through to 2013–14.
Women working in their sixties: why have employment rates been rising?
Employment rates through the recession have been remarkably robust, with today’s ONS figures showing employment remaining close to 30 million. The young have experienced historically low employment rates and high unemployment rates but the employment rate of women aged 60 to 64 has increased as fast since 2010 as it did during the 2000s. An important explanation is the gradual increase in the state pension age for women since 2010, which has led to more older women being in paid work. Without this policy change, the employment rate for 60 to 64 year women would have been broadly flat since 2010.