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IFS - The long shadow of deprivation: Differences in opportunities across England

A socially mobile country provides equal opportunities for everyone, across big cities and small towns, and regardless of whether your parents are rich or poor. This report makes use of newly linked administrative data on all state-educated pupils born between 1986 and 1988 to follow a group of sons from where they grew up, looking at their family circumstances and their educational achievement, through to the labour market.

While previous work has documented the national picture of social mobility in England, for the first time we are able to show how the earnings outcomes of children from different backgrounds vary across lower-tier local authorities. We also explore why there are differences in opportunities across place, considering the role of education and the labour market.

Where you grow up matters

We have found both the adult earnings of sons from disadvantaged families, and the difference in pay between sons from the most and the least disadvantaged families, vary a lot between the more than 320 local authorities in England.

Depending on where they grew up, sons from disadvantaged families can earn on average up to twice as much as similar sons who grew up elsewhere in the country.

The difference in adult earnings between sons from the richest and poorest families who grew up in the least mobile areas is up to two and a half times as large as the difference in earnings between sons who grew up in the most mobile areas.

Some of these differences defy easy explanation. This is not a simple story of north versus south or urban versus rural. Local authorities with the worst outcomes include cities like Sheffield and Bradford. And the perception of London outperforming other regions is only partly borne out, since the capital has boroughs with sharp contrasts in the outcomes of rich and poor children.

We have found deprived areas with limited opportunities adjacent to more affluent areas with greater opportunities, throughout England. Areas with lower pay for disadvantaged sons and less equality of opportunity are typically more deprived, with lower house prices, fewer labour market opportunities in professional occupations and fewer education opportunities in ‘Outstanding’ schools.

Education drives opportunities

Individuals from disadvantaged backgrounds perform less well at school and are less likely to attend university than those from wealthier backgrounds growing up in the same area. Across local authorities, education gaps between sons from poor and wealthy families explain, on average, around 80% of the gap in adult earnings between them.

While sons from the least deprived families have significantly better educational performance than their disadvantaged counterparts in all areas, the size of this achievement gap varies.

In authorities where the difference in educational attainment is largest, sons from the most well-off families score 50 percentiles higher in the age 16 test score distribution than sons from the least well-off families. This gap is over twice as large as in the areas with the smallest gaps in educational achievement.

Areas with the lowest education gaps tend to be those with less selective school systems such as grammar schools. In these areas, pupils from more and less well-off backgrounds are more likely to attend the same schools. They are also more densely populated, with a higher proportion of non-white students. Inner London boroughs make up all of the 10 local authorities with the smallest education gaps.

Education alone is not enough to get on in the areas with the lowest social mobility

Education accounts for a broadly stable amount of the pay gap between sons from the most and least deprived families across local authorities.

In the most socially mobile areas, gaps in educational performance explain virtually all of the earnings gap. In the least mobile areas, however, relative educational performance explains only two-thirds of the adult pay gap. This suggests that reducing educational gaps would reduce pay gaps, but would not reduce differences in mobility across local authorities. To ‘level up’ between areas, we need to look beyond education.

Our cohort of sons entered the labour market around the time of the ‘Great Recession’ in 2008. This report shows that areas with the most unequal opportunities are more deprived and have fewer professional and managerial jobs.

Previous research has shown that the most deprived are hardest hit in bad labour markets – possibly because more affluent sons are better placed to cope by moving away or taking advantage of their family’s financial, social or cultural capital to access the limited opportunities available.

Policy

Policy-makers need to prioritise areas with both the lowest earnings for disadvantaged sons and the largest pay gaps between the most and least deprived sons. Not only do these areas have large education gaps, but for deprived individuals, there is a lasting shadow of family circumstance persisting into adulthood. Giving additional support to this fifth, these localities with lower life chances, must be our mission.

Policies such as investments in Opportunity Areas (2016), the Industrial Strategy (2016) and Midlands Engine (2017), and more recently the Towns Fund (2019) are interventions that target most (but not all) of these areas. This research gives a good evidence base which helps us think about how the foundations laid by this cluster of regionally targeted programmes could be built upon in a post-COVID world. In summary, this new evidence indicates additional areas in which government should consider expanding programmes – in particular Opportunity Areas. It also suggests that, in line with previous Commission recommendations, there is a strong rationale for deepening the Opportunity Areas programme in particular places, developing and trialling ‘what works’ aimed at improving labour market outcomes.

If the lack of labour market opportunities post-COVID has a similar impact on young people as was observed in the Great Recession, we will again see large disparities in income between those from different backgrounds among the generation now entering the labour market.

Key findings

  • Where you grow up matters – social mobility in England is a postcode lottery, with large differences across areas in both the adult pay of disadvantaged sons and the size of the pay gap for sons from deprived families, relative to those from affluent families.
  • In areas with the highest social mobility, disadvantaged individuals aged around 28 earn more than twice as much as their counterparts in the lowest-mobility areas (over £20,000 compared with under £10,000).
  • In areas with low social mobility, pay gaps between deprived and affluent sons are 2.5 times bigger than in areas of high social mobility.
  • In areas of high social mobility, educational achievement accounts for almost all the earnings difference between individuals from deprived and affluent families.
  • In areas of low social mobility, it is far harder for someone from a deprived background to escape deprivation. Up to 33% of the pay gap is driven by non-educational factors.
  • Fifty English local authorities (one in six of those analysed) have both low adult pay for disadvantaged sons and large pay gaps between those from deprived and affluent families.
  • Localities with low life chances include Bolton, Bradford, Chiltern, Hyndburn and Thanet. They typically have fewer professional and managerial occupations, fewer 'Outstanding' schools, more areas of deprivation and moderate population density.
  • To equalise opportunities across the country, government must consider what support can be targeted on these local authorities to improve overall social mobility outcomes.
Original article link: https://www.ifs.org.uk/publications/15012

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