Inherited inequalities: The role of skills, employment, and wealth in the opportunities of new generations

This edition of the Report on Economic Development (RED 2022) analyzes the problem of persistent inequality from a new perspective, which makes it possible to detect the main barriers that prevent the efforts that many families make for their children from translating into greater possibilities of progress due to differences in conditions of origin (social, educational, ethnic and geographic, among others). Thus, RED 2022 analyzes the evolution of inter generational mobility with a long-term and multidimensional approach. Moreover, it proposes three crucial areas to underpin public policies in the region: leveling starting conditions, especially during the first two decades of life, for a better and more equitable formation of human capital; improving the functioning of labor markets to promote occupational and income mobility; and providing greater opportunities for all individuals of Latin America and the Caribbean to increase and improve the quality of the assets they accumulate. Low social mobility in the region is a central problem, not only because of its ties with inequality but also because of its impact on growth and political-institutional stability. When individual progress depends too much on family origin, incentives for effort are weakened and the allocation of human talent is distorted, while the foundations of trust in institutions are eroded. Reducing the inequality of opportunities that generates this low social mobility re quires decisive action, with policies that are implemented integrally and that address the multiple barriers faced by families in the region. Complementing this report with its core financial activity as the development bank of Latin America and the Caribbean, CAF aspires to contribute to the design and implementation of public policies that reduce inequalities, strengthen institutions, and ensure real opportunities for new generations in the region.