The Mobility Paradox

I have been thinking about social mobility because I suspect we often confuse it with equality.

Europe is, broadly speaking, more equal than the United States. After taxes and transfers, income is distributed more evenly in countries such as Germany and France than in America. Public healthcare, subsidised education, stronger labour protections and larger welfare states reduce the distance between the bottom and the middle.

That is real. It matters enormously.

But a different question has started bothering me:

Does a society become more meritocratic simply because its outcomes are more compressed?

I am no longer sure.

A country can protect people from falling very far while also making it difficult for outsiders to rise very high.

It can have a strong floor and a sticky ceiling.

It can reduce income inequality while preserving inherited wealth, family firms, professional status, property and political influence across generations.

The United States presents the opposite discomfort. It is much more unequal. Falling is more dangerous. Poverty can reproduce itself brutally. Yet American wealth lists also seem to renew themselves more aggressively. New fortunes appear in technology, finance, entertainment, logistics and other sectors at a speed that is less visible in much of Europe.

This leads to a hypothesis I want to explore rather than defend at all costs:

Europe may be better at limiting economic distance while America may be better at creating certain forms of top-end churn. Neither system therefore deserves the simple label “more mobile.”

This is an evolving perspective. The evidence is messy, definitions matter, and the data on “self-made millionaires” is particularly weak. But I think the contrast reveals something important about inequality, inheritance and competition.

Equality is not mobility

Let us start by separating two ideas that are constantly blended together.

Inequality asks how far apart people are.

Mobility asks how much a person’s position depends on the position of their parents.

Imagine two ladders.

On the first ladder, the rungs are close together. The poorest person is not dramatically poorer than the median, and the richest person is not unimaginably richer. But everyone tends to remain on roughly the rung where they were born.

On the second ladder, the rungs are very far apart. The bottom is dangerous and the top is spectacularly rich. But people change positions more frequently.

Which society is fairer?

The answer is not obvious because fairness contains at least two competing intuitions.

One is equality of condition: nobody should live in deprivation or dominate society through overwhelming wealth.

The other is equality of opportunity: birth should not determine destination.

European social democracy has historically been stronger on the first.

The American political mythology is built around the second.

The problem is that the mythology and the measurements do not always agree.

The American Dream performs poorly in the mobility data

The standard empirical concept is intergenerational mobility: how strongly children’s incomes, education, occupations or wealth are related to those of their parents.

One common measure is intergenerational income persistence. Put simply, it estimates how much of the income advantage or disadvantage of one generation persists into the next.

Higher persistence means lower mobility.

This is where the United States disappoints its own story.

The research associated with the so-called Great Gatsby Curve has repeatedly shown a relationship between high inequality and low intergenerational mobility. Countries with larger income gaps tend to transmit economic position more strongly from parents to children.

The United States is not the least mobile society in the world. But among rich democracies it performs much less impressively than its self-image suggests.

The OECD tried to translate this abstract relationship into a more intuitive measure in its 2018 report A Broken Social Elevator? It estimated how many generations it would take for descendants of a low-income family to reach the average income if historical rates of intergenerational mobility continued.

The numbers were deliberately illustrative, not forecasts of individual lives.

But they are striking.

In the Nordic countries, the journey was roughly two to three generations.

Spain was around four.

The United Kingdom and the United States were around five.

France and Germany were around six.

The OECD average was roughly four to five generations.

Germany is the surprising result.

The country is more equal than the United States after taxes and transfers. Yet in this particular OECD mobility estimate, a low-income family’s distance from the mean was more persistent.

That alone should make us suspicious of easy stories.

A generous welfare state can reduce suffering today without automatically erasing the advantages that affluent parents transmit to their children tomorrow.

The bottom and the top are different mobility problems

We also make a mistake when we treat “social mobility” as one thing.

Moving from the bottom quintile to the middle is not the same process as moving from the middle class into the top one percent.

The first may depend heavily on education, neighbourhood quality, health, childhood stability and access to employment.

The second may depend on entrepreneurship, access to capital, ownership, elite networks, high-growth sectors and the ability to take risks.

The third problem is staying at the top once you are there.

That may depend on inheritance, tax law, trusts, family firms, property, professional networks and political influence.

These are related mechanisms, but they are not identical.

This is where I think the comparison between Europe and America becomes more interesting.

Europe may do more to keep a poor child from falling catastrophically below society.

America may offer more pathways for a founder to become extraordinarily rich.

Europe may then be more tolerant of families preserving accumulated wealth across generations than its egalitarian self-image suggests.

America, despite generating more new fortunes, is also extremely effective at reproducing poverty and transmitting advantage through neighbourhoods, schools and family wealth.

There is no clean winner here.

There are different systems of inheritance.

How many millionaires are actually self-made?

This is where the public debate becomes statistically sloppy.

You will often see claims such as “80 percent of millionaires are self-made” or “most millionaires inherited their wealth.”

The problem is that there is no single, harmonised transatlantic dataset that classifies every millionaire in the United States, Germany, France, Spain and Britain by the origin of their wealth.

The category itself is unstable.

A person with a paid-off home in Munich or London may be a millionaire on paper.

A founder worth €50 million whose parents financed university and a first apartment may be classified as self-made because she did not inherit the company.

Another person may inherit €2 million and grow it to €20 million. Is that inherited or self-made?

Surveys often rely on self-description. Wealth rankings use journalistic classifications. Household datasets miss many of the ultra-rich.

So I do not think a serious article should pretend we possess a clean answer to the millionaire question.

What we can do is examine the top of the wealth distribution, where the evidence is better and where economic power becomes more consequential.

A World Bank working paper by Caroline Freund and Sarah Oliver created a database of billionaire origins and compared Europe with the United States. Their result fits the intuition that motivated this essay: more than half of European billionaires in their data were inheritors, compared with roughly one-third of American billionaires. They also found that the companies behind European billionaire fortunes were, in the median, almost twenty years older than those behind American billionaire fortunes.

That is not a millionaire statistic.

It is a billionaire statistic.

But it reveals the structure of extreme wealth.

The United States produces a larger share of fortunes associated with founders, finance and newer technology businesses. Europe has a larger inherited component and more wealth connected to older firms and traditional sectors.

The distinction has not disappeared. UBS’s recent billionaire research describes an intensifying global inheritance wave while simultaneously identifying large numbers of new self-made billionaires, especially in the United States. In 2025, according to UBS, 91 people became billionaires through inheritance while 196 new self-made entrepreneurs entered the billionaire class globally.

The correct conclusion is therefore not “America is self-made and Europe is inherited.”

It is:

The composition of extreme wealth appears more entrepreneurial and newly created in the United States, while inherited fortunes have historically represented a larger share of Europe’s billionaire class.

That is a narrower claim. But it is also more defensible.

Germany: equal income, unequal wealth

Germany deserves special attention because it complicates the European self-image.

In disposable-income terms, Germany is relatively equal compared with the United States. Taxes, transfers and social insurance compress household income substantially.

But Germany’s wealth distribution is far more unequal than its income distribution.

This distinction is fundamental.

Income is a flow.

Wealth is a stock.

You can tax salaries progressively, insure people against unemployment and provide public healthcare while leaving the ownership of companies, property and financial assets highly concentrated.

Germany does exactly this more than many casual observers realise.

Research using German household wealth data has found that inheritance plays a modest role for some groups and an enormous role at the top. A distributional analysis by Timm Bönke, Giacomo Corneo and Christian Westermeier estimated that inheritance accounted for about a third of wealth for broad middle and upper-middle groups, while their estimate for the very top suggested that inherited wealth could account for roughly four-fifths of net wealth.

The estimate for the top is necessarily less precise because household surveys are bad at capturing the extremely rich.

But that data problem is itself revealing.

The wealthy are hard to survey because there are few of them, their assets are complex and their fortunes are often organised through companies and holding structures.

Germany’s family-business tradition is a source of genuine economic strength. The Mittelstand, long-term ownership and patient capital are not inventions of a public-relations department. Family firms can invest with longer horizons and maintain capabilities that impatient capital markets might destroy.

But every institutional strength creates a preservation problem.

If a society decides that continuity of family businesses is socially valuable, it will create tax and legal provisions to prevent those businesses from being broken up at succession.

Those provisions may be economically rational.

They also make it easier for very large productive assets to remain inside the same families.

This is where equality and inheritance collide.

Germany is willing to tax labour and redistribute income aggressively enough to create a broad social floor.

It is much more cautious about disrupting inherited control of productive wealth.

That may be good industrial policy.

It may also be dynastic preservation.

Both can be true at once.

The invisible inheritances

We should also be careful not to reduce inheritance to the reading of a will.

The most important transfer may arrive twenty years before a parent dies.

A deposit for an apartment.

University without debt.

A year spent building a company without needing income.

An unpaid internship in an expensive city.

A family introduction to a bank.

A first customer.

A guarantee on a loan.

A room in London.

A car.

Childcare.

The knowledge that failure will not mean homelessness.

These are not always counted as inheritance.

Economically, they perform a similar function: they allow one generation’s accumulated resources to alter the risk capacity of the next.

This is especially important when asset prices rise faster than wages.

In Britain, work by the Institute for Fiscal Studies has shown how uneven inter vivos transfers are. Young adults with richer, university-educated, home-owning parents receive dramatically more support than children of renters. The “bank of mum and dad” is not a cute cultural phenomenon. It is a mechanism of class reproduction.

The same logic applies elsewhere.

When housing becomes the main gateway to wealth, the child of a homeowner inherits an option that the child of a renter does not possess.

A society may have free university and universal healthcare and still reproduce class through property.

This is why measuring only income mobility understates the problem.

My hypothesis about regulation

The intuition that originally led me into this subject was more provocative.

I wondered whether Europe’s wealthy classes influence regulation in ways that preserve existing wealth by limiting competition, while America’s wealthy classes tolerate looser entry because they face more competition from new money.

There is a seductive story here.

Old wealth prefers stability.

New wealth prefers disruption.

A billionaire whose fortune comes from a fifth-generation industrial firm may favour regulatory certainty, controlled markets and cautious change.

A founder trying to destroy an incumbent industry may favour easier entry, flexible capital and permission to experiment.

If the composition of elite wealth differs between Europe and America, perhaps elite political preferences differ too.

I think there is something in this argument.

But the strong version is too simplistic.

The United States is not a lightly regulated free-for-all. It has occupational licensing, exclusionary zoning, agricultural protection, complex financial rules, patent monopolies, local permitting barriers and industries dominated by incumbents. American companies lobby to shape regulation in their favour just as European companies do.

Nor is European regulation simply a conspiracy of old money. Environmental rules, labour rights, privacy law, consumer protection and financial regulation can deliver real public value.

The important distinction is not regulation versus no regulation.

It is whether a regulatory system lowers social risk while accidentally raising entry costs for challengers.

This is where Europe has a problem.

The European Commission itself has acknowledged that startups and scale-ups face fragmented rules across 27 national systems. Capital markets remain less integrated. Late-stage funding is thinner. Company law, insolvency, taxation and employee equity arrangements differ across borders.

The Commission’s 2025 Startup and Scaleup Strategy explicitly identified fragmented regulation, limited access to finance, market barriers and talent constraints as obstacles. In 2026 it proposed an “EU Inc” framework partly to let innovative companies operate under a more unified legal regime.

The numbers behind the concern are difficult to ignore. The EU created more startups per year than the United States between 2018 and 2023, according to the Commission, yet at the beginning of 2025 it had about 110 unicorns compared with 687 in the United States. Late-stage US funding capacity was estimated at around seven times the EU level.

This does not prove that European aristocrats designed regulation to keep founders down.

It supports a subtler mechanism:

Complexity acts like a tax on entry, and incumbents are usually better able to pay it.

A large company has lawyers, compliance departments and relationships with regulators.

A newcomer has a founder and a spreadsheet.

A regulation can be perfectly well intentioned and still increase the relative advantage of established firms.

Over decades, this can make an economy more orderly and less contestable at the same time.

Incumbency is an asset

Once I started thinking in these terms, I realised that inherited wealth and regulation belong to the same conversation because both concern incumbency.

An incumbent family has accumulated capital.

An incumbent company has accumulated market access.

An incumbent profession has accumulated licensing authority.

An incumbent homeowner has accumulated an asset in a restricted housing market.

An incumbent university has accumulated prestige.

An incumbent social class has accumulated knowledge of how institutions work.

The political economy of mobility is therefore not only about redistributing money after markets produce outcomes.

It is about asking whether newcomers can challenge incumbents before those outcomes are produced.

Europe often focuses on redistribution.

America rhetorically focuses on competition.

The European model says: the market may create unequal incomes, but the state will compress the result.

The American model says: the market should be open enough that anyone can try to win.

In practice, neither system fully honours its own ideal.

Europe redistributes income but often protects incumbency.

America celebrates entry but tolerates extreme concentrations of wealth and power that themselves become barriers to entry.

The American winner can buy the ladder.

The European incumbent may already own the building.

A country-by-country reading

The broad comparison hides large differences inside Europe.

Germany: the sticky centre

Germany combines relatively low disposable-income inequality with disappointing intergenerational mobility in the OECD’s illustrative generations measure.

Its education system has historically sorted children relatively early into different academic and vocational tracks, although reforms vary by Land. Family background remains influential in educational attainment. Wealth ownership is concentrated, home ownership is comparatively low, and inherited business wealth is important at the top.

My interpretation is that Germany is very good at producing a secure middle and less good at destroying inherited positional advantage.

The system protects continuity.

That is both its strength and its weakness.

France: a powerful state, persistent elites

France also compresses income inequality strongly through taxes and transfers.

Yet its elite educational and administrative institutions have historically reproduced narrow pathways into positions of power. The French state is capable of levelling material conditions more than the American state, but this does not mean social origins become irrelevant.

France’s position in the OECD mobility estimate—around six generations for a low-income family to reach average income—sits awkwardly beside its egalitarian republican language.

My instinct is that France demonstrates how universalism can coexist with elite closure.

The state may refuse to recognise class formally while institutions reproduce it socially.

The United Kingdom: class never really left

Britain is easier to read because class is less hidden.

Income inequality is high by Western European standards and, among the countries discussed here, closer to the United States.

Private schools, London property, regional inequality and highly concentrated access to elite professions create visible channels of intergenerational persistence.

The UK also illustrates the growing importance of parental wealth transfers in early adulthood.

It feels less like the continental European model and more like a hybrid: American-style inequality with a particularly old architecture of social class.

Spain: more movement than expected, but property dominates

Spain is interesting because it performed better than Germany and France in the OECD’s generations estimate, at around four generations.

Yet Spain also has high youth unemployment, strong regional disparities and a labour market historically divided between insiders with protected contracts and outsiders with precarious ones.

Housing and family support play a major role in economic security.

That creates a form of mobility that can be difficult to read from income alone. A low-earning young adult living in a family-owned home may be materially more secure than income statistics suggest. Another young adult with the same salary and no family property may inhabit a completely different economic class.

Spain reminds us that the family can act as a welfare state.

It can also act as an inheritance machine.

The United States: high churn, high persistence

America’s defining contradiction is that it can produce extraordinary upward mobility in particular places and sectors while reproducing disadvantage nationally.

Research by Raj Chetty and collaborators has shown enormous geographic variation in upward mobility across the United States. A poor child growing up in one city can face a radically different probability of reaching the top than a poor child growing up elsewhere.

This matters because “the American system” does not produce one mobility rate.

It produces thousands of local opportunity structures.

The United States also has something Europe genuinely struggles to replicate: very deep capital markets, a large unified market, high tolerance for business failure and a cultural infrastructure that is unusually willing to fund ambitious newcomers.

That helps explain the constant production of new fortunes.

But new billionaires are not proof of broad social mobility.

A society can produce Elon Musk, Mark Zuckerberg and thousands of venture-backed founders while millions of children remain trapped by neighbourhood segregation, school quality, healthcare access and family wealth.

Top-end churn and bottom-end mobility are not the same variable.

America is the clearest proof.

Downward mobility matters too

We speak about mobility as if “up” were the only direction.

But a truly open society should also permit downward movement from the top.

If the children and grandchildren of the wealthy remain wealthy regardless of talent, effort or contribution, the system is not meritocratic. It is merely good at producing stories about the occasional outsider who breaks in.

This is why inheritance belongs at the centre of the mobility debate.

The moral question is not whether parents should help their children. Of course they will. Any political project built around preventing parents from caring about their children is both impossible and undesirable.

The question is one of scale.

At what point does parental help become hereditary economic power?

A paid university degree is one thing.

A €50 billion industrial empire is another.

Our tax systems often treat these as variations of the same private family act.

Politically, they are not.

Large fortunes can shape markets, media, lobbying, philanthropy and access to politicians. When they pass intact across generations, society is not simply respecting family autonomy. It is transferring institutional power to people selected by birth.

The uncomfortable test of a meritocracy is not only whether a poor child can rise.

It is whether a rich child can fall.

A better mobility dashboard

I think the debate needs to move beyond one number.

If I wanted to judge whether a society is genuinely mobile, I would look at at least five dimensions.

1. Bottom-to-middle mobility

What is the probability that a child born in the bottom income quintile reaches the middle or above?

This tells us whether poverty is persistent.

2. Bottom-to-top mobility

What is the probability that a child born poor reaches the top quintile or top decile?

This measures extraordinary upward movement.

3. Top persistence

How likely is a child born at the top to remain there?

This is the measure societies obsessed with success stories often ignore.

4. Wealth-origin composition

How much wealth at the top is inherited, and how much is associated with newly created firms, labour income, entrepreneurship or investment?

This tells us whether the elite is renewing itself.

5. Entry contestability

How easy is it for a newcomer to challenge an incumbent company, profession, landowner or institution?

This is harder to measure, but it may be the most important long-run variable.

Business formation, scale-up rates, venture financing, occupational licensing, housing supply, bankruptcy law and market concentration all belong here.

A country could score well on equality and poorly on contestability.

It could score well on founder wealth creation and terribly on bottom mobility.

The dashboard would force us to see the trade-offs.

My revised view

I started with a suspicion that Europe protects old wealth while America protects competition.

I now think that statement is too flattering to America and too conspiratorial about Europe.

The evidence supports a more complicated view.

Europe has built institutions that make economic failure less catastrophic. That is one of its greatest achievements. A child born poor in a European welfare state may receive healthcare, education and social protection that dramatically expand her capabilities compared with a similarly poor child in many parts of the United States.

But Europe often confuses a strong floor with an open system.

Inherited wealth can remain highly persistent. Housing can divide owners from non-owners. Elite institutions can reproduce status. Fragmented regulation and thin capital markets can make scaling a new company harder than founding one. Rules designed for good reasons can accumulate until incumbency itself becomes a competitive advantage.

America has a different failure.

It creates more visible new wealth and appears more capable of replacing old names with new ones at the very top. Its capital markets and unified business environment make extreme entrepreneurial ascent more plausible.

But the existence of new billionaires does not rescue the American Dream from the mobility data. The United States remains highly unequal, and parental income, wealth, race and geography continue to shape children’s outcomes strongly.

So perhaps the real distinction is this:

Europe is better at limiting how far you can fall. America is better at making certain forms of extraordinary ascent possible. Both are worse than they think at making birth irrelevant.

Germany may be the purest European case.

It has created a society in which many people can live securely without becoming rich.

That is a genuine civilisational success.

But it also raises a difficult question: if the poor are protected, the middle is stable and the wealthy can transmit large fortunes and business control across generations, has inequality been solved—or merely made more comfortable?

The answer depends on what we think a fair society owes us.

A decent life?

A fair chance?

The possibility of becoming extremely rich?

Or a system in which no family can permanently convert yesterday’s success into tomorrow’s hereditary power?

I do not yet have a clean answer.

But I am increasingly convinced that inequality without mobility is aristocracy, while mobility without security is a lottery.

The political challenge is to build something between them:

A society with a high floor, an open ladder and a ceiling that cannot be inherited indefinitely.

---

Sources and notes for future versions

This Perspective draws principally on the OECD’s A Broken Social Elevator? How to Promote Social Mobility (2018); Caroline Freund and Sarah Oliver’s World Bank working paper The Origins of the Superrich: The Billionaire Characteristics Database (2016); UBS billionaire research, including the 2025 Billionaire Ambitions Report; research on German inherited wealth by Timm Bönke, Giacomo Corneo and Christian Westermeier; work by the Institute for Fiscal Studies on intergenerational wealth transfers in Britain; research by Raj Chetty and collaborators on geographic variation in US mobility; and the European Commission’s 2025 Startup and Scaleup Strategy and subsequent EU Inc proposals.

Future revisions should add a harmonised table of intergenerational income persistence, bottom-quintile transition probabilities and top persistence for Germany, France, Spain, the United Kingdom and the United States; distinguish income from wealth mobility more rigorously; examine inheritance and business-asset tax rules country by country; and test the “incumbency tax” hypothesis against sector-level competition data.