Swiss social mobility "exceptional" amid rising global inequality, study finds

While other countries around the world grapple with rising inequality, a new study from the Swiss Economic Policy Institute (IWP) at the University of Lucerne has found that the trend has not been extended to the alpine nation. They found that social mobility remains remarkably good in Switzerland, with salaries still largely linked to ability.

Income inequality in Switzerland remains stable

To create the study, the university compared how social mobility and opportunities for social advancement have changed in Switzerland and the United States since the 1980s. In this case, social mobility means whether differences in income and prosperity can be attributed to a person’s cognitive ability or skill (good social mobility) or to nepotism and familial relationships (poor social mobility).

For the US, the IWP noted that “the American Dream has recently been damaged”. They found that between the 1980s and 2020s, “not only did income concentration increase sharply, but at the same time social mobility also declined noticeably”. In the US today, the top 10 percent of households own 60 percent of the country’s wealth.

By contrast, in Switzerland, income inequality has remained largely unchanged for 45 years. Despite being home to more millionaires per capita than anywhere in the world, as of 2021, the top 10 percent of households own 34,5 percent of the nation’s wealth, compared to 29,7 percent in 1981.

Swiss salaries still largely linked to ability and education

The IWP also used the income of siblings in Switzerland to determine whether merit or familial connections have more of an impact on earnings. The thinking being that income differences between brothers and sisters cannot be blamed on nepotism. Here, the alpine nation also does well.

They found that on average between 1981 and 2021, a worker in Switzerland can attribute just 17 percent of their earnings to family background and upbringing. Rates have remained largely unchanged since the 1980s, and have never risen above 21 percent in the last 40 years. This means that “Switzerland has exceptionally high levels of social mobility by international standards – even higher than the much-praised Scandinavian countries and significantly above the US level”.

“Whereas US mobility declined sharply in parallel with rising top income shares…the Swiss case demonstrates that stable institutional and economic conditions can sustain intergenerational mobility even as inequality rises elsewhere,” the IWP report concluded. To read the full study, check out the IWP website.