Intergenerational Income Mobility in China and Underlying Mechanism

Based on ten rounds of CHNS data from 1989 to 2015,this paper employed dual measurement indicators of the intergenerational elasticity(IGE)of earnings and the income rank association(IRA)coefficient to measure intergenerational income mobility in China.Our findings suggest that China’s intergenerational income mobility was relatively stable from 1991-2004 and started to increase after 2004.Our study based on income grouping found that the intergenerational income immobility decreased after 2004 for all income groups;however,the high-income and low-income groups were far more immobile than other income groups;the middle-income group served as a key driver of the relatively high intergenerational income mobility in China.Furthermore,we investigated China’s intergenerational income transmission mechanism with a human capital analysis framework.We found that fathers’non-education factors played a dominant role in intergenerational income transmission;under the effects of the social institutional environment,the non-education transmission mechanism started to diminish after 2004,significantly contributing to intergenerational income mobility.

Determinants of Household Income Mobility in Rural China

This article uses multivariate regression and decomposition analyses to assess household income mobility determinants and their contributions to income mobility in rural China from 1989 to 2006. The findings indicate that households with lower initial income level, higher share of wage income, higher educational level of household members, larger number of non-agricultural employed household members and younger heads are more mobile. Moreover, besides initial income, change in the share of wage income, change in the share of non-agricultural employed household members, and change in average year of education of household members are the most important factors that account for income mobility. These findings necessitate more emphasis on policies that promote non-agricultural employment and education to enhance household income mobility in rural China.

Income Mobility and Income Inequality in Rural China

The economic literature has argued for a long time that income mobility could attenuate the degree of cross-sectional inequality by offering people opportunities to improve their socio-economic position. Using the longitudinal data from the China Health and Nutrition Survey （CHNS） from 1989 to 2011, we measure income mobility as the degree to which longer-term incomes are distributed more or less equally than yearly income. Five main results are emphasized. First, there is strong income mobility in rural China that partly offsets yearly income inequality. Second, income mobility has decreased since the 2000s, indicating that income distribution is becoming more rigid. Third, mobility is mainly associated with transitory income fluctuations, particularly in the two tails of the distribution. Fourth, income mobility has an equalizing effect on income distribution. Fifth, we show that non-agricultural income mobility has substantially increased over the period and that its equalizing nature has also recently increased. While the development of the non-agriculture sector in rural China was a crucial factor in explaining the increase in rural inequality until the mid-2000s, we suggest that the large-scale generalisation of such non-agricultural opportunities partly accounts for the decline in rural inequality observed since the mid-2000s.