Peru’s young population is full of potential, but too much of it remains underused. Intergenerational mobility has improved in education but remains weak in incomes. This disconnect explains why a young and increasingly educated population has not translated into stronger productivity growth or broader economic opportunity.
By Paula Garda, OECD Economic Department
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Despite rising educational attainment across generations, weak learning outcomes and school-to-work transitions, widespread informality, and persistent gender gaps limit upward mobility and prevent human capital from being fully used. Addressing these constraints would lift productivity, expand formal employment, and raise Peru’s long-term growth potential. Peru’s young population is full of potential, but too much of it remains underused. Intergenerational mobility has improved in education but remains weak in incomes. This disconnect explains why a young and increasingly educated population has not translated into stronger productivity growth or broader economic opportunity. Despite rising educational attainment across generations, weak learning outcomes and school-to-work transitions, widespread informality, and persistent gender gaps limit upward mobility and prevent human capital from being fully used. Addressing these constraints would lift productivity, expand formal employment, and raise Peru’s long-term growth potential.
Access to education has improved, but outcomes remain weak
Educational attainment has improved substantially across generations. Intergenerational educational mobility, that measures whether children reach higher levels of education than their parents, has increased by 56% between cohorts born in the 1940s and those born in the 1980s (Figure 1). This improvement is larger than in most Latin American peers and reflects sustained expansion of access to school over several decades.
But progress has been uneven. Only 59% of 15–19-year-olds are enrolled in school reflecting high dropout rates, especially in rural areas, where long commutes, financial pressures, and early entry into the labour market pull students out of school.
Progress in education has not translated into similar income mobility. Intergenerational income mobility, that measures whether children earn more than their parents as adults, has risen by only 15%, far less than education mobility, showing that higher education has not led to proportional income gains across generations. Where a child grows up and whether their parents work informally continue to strongly shape earnings prospects in adulthood. Rural residents, women, and children of informal workers remain significantly less likely to surpass their parents’ income, constraining both equity and aggregate growth.
When schooling does not lead to better earnings
Learning outcomes remain weak despite higher enrolment. Peru’s PISA scores are well below the OECD average, placing the country close to the bottom among participating economies. Students from poorer households perform substantially worse than their peers, reflecting gaps in teacher quality, infrastructure, and access to basic services, particularly in rural schools.
Weak learning outcomes contribute to difficult school-to-work transitions. Around one in five young Peruvians is not in employment, education, or training. NEET rates are higher among women, driven in part by early motherhood and limited access to childcare, which restricts labour market attachment at the start of working life.
Even those who do work are often trapped in informal jobs. Over 71% of all workers, and over 85% of young workers, are informal (Figure 2). Informal jobs offer limited training, low wages, and no social protection, reducing incentives for skill accumulation. As a result, informality is frequently transmitted across generations, locking families into low-productivity employment and weakening aggregate productivity growth.
Gender disparities reinforce these dynamics. Women have largely closed education gaps relative to men but still face a 17 percentage point employment gap and earn 19% less on average. Unequal care responsibilities and limited childcare and eldercare services push many women into informal or part-time jobs, lowering lifetime earnings and reducing labour supply.
Policy priorities to boost intergenerational mobility
Unlocking Peru’s full potential requires action on several fronts:
- Improve education quality and early foundations. Expanding access for children under three, especially in rural and vulnerable areas, would improve cognitive outcomes and support higher female labour force participation. Strengthening teacher training, enforcing merit-based recruitment, and upgrading rural school infrastructure are essential to close learning gaps and reduce dropout rates.
- Strengthen school-to-formal-work transition. Vocational education and training remains underdeveloped. Only 2% of youth are enrolled in VET programmes, far below OECD benchmarks. Expanding VET, improving governance, and aligning curricula with labour market needs would ease entry into formal employment. Second-chance education combined with employment services and targeted social support can help re-engage NEET youth.
- Create formal jobs. Improving skills as outlined above would help reduce informality, but a comprehensive agenda combining skills, labour, and business reforms is needed to make formality the norm. Shifting social security contributions away from firm-size thresholds toward progressive labour-income-based contributions would reduce incentives to remain small or informal, especially for low-wage workers. Streamlining labour and business regulations, strengthening enforcement, and improving SME productivity and access to finance would support higher-quality job creation.
Improving intergenerational mobility is a driver of economic growth. When children can reach their full potential regardless of their family background, the country benefits from a larger, better-skilled workforce. By improving education quality, expanding formal jobs, and reducing gender disparities, Peru can turn its young population into the engine of stronger, broadly shared growth.
For more information: OECD Economic snapshot for Peru.
Reference
OECD (2025), https://www.oecd.org/en/publications/oecd-economic-surveys-peru-2025_76f6eb73-en.html, OECD Publishing, Paris.