Intergenerational Income Elasticity And Its Change Research In China

With China’s rapid economic development, the income gap is being further expanded,which highlights the issue of fairness among the income distribution. In-depth study of theunderlying causes of this phenomenon has important theoretical value and practicalsignificance. Intergenerational income mobility studies provide a new perspective.Previous studies of recent intergenerational income mobility of china have produce widelyvarying results, partly because of large sampling errors. We use data from the China Healthand Nutrition Survey(CHNS) to assess whether the effect of parental income on children’seconomic status has changed between1993and2009. By making more efficient use ofavailable information, we generate more reliable estimates of the recent time-seriesvariation in intergenerational mobility. The basic empirical results are as follows.Firstly, our results do not reveal major changes in intergenerational income mobility, whichis between0.4and0.5. The average of intergenerational income elasticity is0.47, showinglow social mobility. By dividing the sample, we find the21-25age group has higherintergenerational income elasticity than the results of developed countries in the same agegroup. The elasticity of25-30group is higher than that of other groups.Secondly, children’s education, parents’ education and parents’ jobs play important roles inthe changes of intergenerational income mobility over this period. The effect of parents’income on children’s education increases till2004. The effect of parents’ education andparents’ jobs increase even after2004, which means family background plays anincreasingly important role in the intergenerational income mobility in recent years. Wesuggest that the constant in the effect of parental income on children’s income may be dueto the increase in government investment in children, especially in their educationalattainment.