Socioeconomic effects and the role of public spending decomposition on income mobility: a moderated regression model

Abstract

The aim of this paper is to investigate, empirically, what components of public spending imply a decreasing effect on income mobility, and what components create income opportunities, also discussing the role of government effectiveness. The role of the components of government expenditure is analysed in the association between intergenerational income mobility and socioeconomic characteristics, which are relevant for the life chances of children. Using the Global Database on Intergenerational Mobility, containing estimates of intergenerational income mobility at country level, and applying the moderated regression model, the results show strikingly consistent patterns. A country with more disadvantaged conditions displays less intergenerational income mobility than other countries, but public spending has a moderating role in improving the life chances of children towards upward economic mobility. Public investment devoted to those socioeconomic characteristics that create income opportunity may lead to less government effectiveness in the achievement of income mobility.