Intergenerational Income Mobility in China and Underlying Mechanism

Yang Mo (杨沫)1 and Wang Yan (王岩)2*

1 Rural Development Institute, Chinese Academy of Social Sciences, Beijing, China

2 Institute of Advanced Studies in Humanities and Social Sciences, Beijing Normal University at Zhuhai, China

Abstract: Based on ten rounds of CHNS data from 1989 to 2015, this paper employeddual measurement indicators of the intergenerational elasticity (IGE) of earnings andthe income rank association (IRA) coefficient to measure intergenerational incomemobility in China. Our findings suggest that China’s intergenerational income mobilitywas relatively stable from 1991-2004 and started to increase after 2004. Our study basedon income grouping found that the intergenerational income immobility decreased after2004 for all income groups; however, the high-income and low-income groups werefar more immobile than other income groups; the middle-income group served as a keydriver of the relatively high intergenerational income mobility in China. Furthermore,we investigated China’s intergenerational income transmission mechanism with a humancapital analysis framework. We found that fathers’ non-education factors played a dominantrole in intergenerational income transmission; under the effects of the social institutionalenvironment, the non-education transmission mechanism started to diminish after 2004,significantly contributing to intergenerational income mobility.

Keywords: Intergenerational income mobility, opportunity inequality, urbanization, theexpansion of higher education

JEL Classification Code: D10, D31

DOI: 10.19602/j.chinaeconomist.2022.1.03