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.

Intergenerational Transmission of Income Gap for Chinese Urban and Rural Households

An accurate understanding of the intergenerational transmission of income gap is the foundation for theoretical research and policy formulation to address this issue. This paper has employed the method of two sample instrumental variables to effectively integrate CHIP data and CFPS data and correct the temporal income bias, life-cycle bias and coresidence bias, which are common problems in existing studies, and investigated the tendencies of intergenerational transmission of income gap for China's urban and rural households between 2002 and 2012. Results of empirical study indicate that the intergenerational transmission of income gap for China's urban and rural households has been on the decline yet the level of intergenerational transmission is greater for urban residents than for rural residents. This level of intergenerational transmission of income gap in China is at a medium international level lower than that of countries like the United States, Brazil and Japan and higher than that of Sweden and Chinese Taiwan. Further analysis of the intergenerational mobility of various income groups suggests the following: the intergenerational solidification of the bottom and top income groups of urban residents has significantly improved, which is the source for the reduction of intergenerational transmission of income gap. Rural residents of bottom income group are vulnerable to falling into the trap of intergenerational transmission of low income. In order to mitigate the intergenerational transmission of income gap, efforts must be made to improve educational allowance policy and increase the opportunities for children from poor and underprivileged families to receive education and to eliminate the divide of labor markets to create equal job opportunities for each and every worker.