Hope here for the poor to move up in life

By Janice Heng, The Straits Times, 13 Jan 2012

A STUDY from the Finance Ministry shows that children from poor Singaporean families stand a good chance of moving up in life.

But this may not apply to younger generations born later than the study's sample group of Singaporeans born between 1969 and 1978, says the study released yesterday.

Its findings show that the son of a father in the bottom 20 per cent of income earners has at least a two-thirds chance of breaking out of this low-income group.

And he has a 10 per cent chance of rising all the way up into the top 20 per cent of income earners in Singapore.

The study also found that the level of mobility in Singapore is better than that of the United States and United Kingdom, similar to that of Germany, but worse than that of Canada and some Nordic countries.

However, it cautions that these are general and indicative comparisons as the data varies among countries.

The study also notes its findings show a relatively higher income mobility than that of two recent studies: a 2007 paper by assistant professor Irene Ng of the National University of Singapore (NUS), and a 2009 one by Dr Ng, Ms Shen Xiaoyi of NUS and Dr Ho Kong Weng of Nanyang Technological University.

Both papers used data from a national survey of youths aged 15 to 29. But that data had various constraints, said the study from the ministry.

Their sample size was small: 271 parent-child pairs. And they measured incomes of youths aged below 30, which is 'generally regarded as too early to draw conclusions on life-time mobility'.

In addition, parents' incomes were not directly measured. The papers were based on what the youths thought their parents earned, added the ministry study.

By contrast, the new study draws on data from the Department of Statistics, allowing it a much larger sample size of 39,500 father-son pairs. Considering sons, rather than children of both sexes, is standard practice in such studies.

It measured the incomes of sons aged 30 to 39 in 2008, as well as the actual incomes of their fathers.

Using this more robust data, it found an inter-generational correlation coefficient of 0.22 to 0.3, a statistical measure of how much a father's income affects his son's economic chances.

The lower the number, the less effect a father's income has on his son's - meaning that mobility is higher.

A coefficient of 0.3 implies a set of probabilities and these include:

- The son of a father from the bottom fifth has a one-third chance of staying there.

In other words, he has a two-thirds chance of rising out of the bottom fifth.

- The son has a 44 per cent chance of making it into the top three-fifths; a 25 per cent chance of reaching the top two-fifths; and a 10 per cent chance of rising into the top fifth.

The converse is true.

A son whose father is in the top fifth has a one-third chance of staying in the high-income group.

And a son whose father is in the middle fifth has a roughly equal chance of moving up or down.

Despite these overall findings of 'moderate to high' mobility, the study found that mobility was lower for the poorest.

Fathers' incomes had a slightly greater effect on sons' incomes at the bottom 10per cent.

The correlation coefficient for this group is between 0.27 and 0.36, compared to the overall coefficient of between 0.22 and 0.3.

It led the study to conclude that 'there is some evidence, though not strong, of lower mobility among the poor'.

A greater concern perhaps is in the study's cautionary note that 'the relatively high mobility found in this paper may not be generalised to other cohorts, in particular younger cohorts'.

National University of Singapore sociologist Paulin Straughan told The Straits Times that mobility for Singaporeans born in the 1970s was especially high for two reasons.

First, progress began from a low base as among the older generation, 'very few had the privilege of formal education'.

Second, as the study itself notes, those born in the 1970s would have 'grown up at a time when Singapore's transformation was very rapid'.

There were many opportunities in education and work then. But young Singaporeans today face a 'very competitive' world, said Dr Straughan.

As Singapore develops, there is now 'a certain level of saturation' at the top, she added. Well-to-do parents want the best for their children and this hampers mobility as their children have an edge.

'We have to recognise that not all children will be starting off at the same point,' said Dr Straughan.