The Impact Research On The Income Inequality From Parents To Children

At present, China is in a special period of economic growth, social stability problems caused by income inequality has seriously hindered the healthy development of the Chinese economy. Old saying: “what kind of parents have what kind of children”,“dragon born dragon, chicken born chicken, mouse son can make hole”, followed by the emergence of the “poor second generation”,“rich second generation”, “official second generation” and so on. The social justice mechanism is being tortured by the “two generation” in our country. The crux of these problems are closely related to the intergenerational transmission of income inequality. In fact, intergenerational transmission of income inequality is the story of the family behind the inequality. Its deep philosophy is seeking for the realization of a kind of equal opportunity,economic fairness and society justice.Equality of opportunity means that individuals have the same opportunity to grow and succeed as others after birth, that is “all men are created equal”. If birth and family background are different, the individual development opportunities and the chance of success are different, for example, the children of wealthy families with more social resources are more likely to get the opportunity to get success, but the children of poor families are subject to various restrictions, it is difficult to get rid of the current situation of poverty and thus can not be successful. Then the society is hardly a society of fair opportunities, it will lead to the curing of social class and bring adverse effects to the harmonious development of the society.Opportunity inequality is made up of a series of factors that affect the outcome of the income, mainly including the level of education, occupation of parents, family income, place of birth, race, ethnicity, gender and so on. From an intergenerational perspective, the parents’ income level is a comprehensive measure of family background, which is closely related to the degree of education, occupation, social status and so on. Here, the children’s income inequality related to parents’ income inequality is called opportunity inequality.This paper is based on the theory of intergenerational transmission of income proposed by Beacker(1993). We applied the data of China Health and Nutrition Survey(CHNS) in 1989 and 2011, we make an empirical study of the impact on the parents’ income inequality to children’s income inequality from the perspective of opportunity inequality. Firstly, we have a preliminary characterization of the impact on the parents’ income inequality to children’s income inequality by random dominant method.Secondly, we explore the intergenerational income mobility between parents and children in the general, different regions, and different age groups by establishing model.Thirdly, we calculate the degree of income inequality between parents and children by constructing the inequality index, and analyze the relationship between children’s income inequality and opportunity inequality. Finally, we decompose the children’s income inequality and the change of opportunity inequality by the income inequality decomposition method and the Blinder Oaxaca decomposition method. We will explore the influencing factors of income inequality and the impact mechanism of opportunity inequality.The empirical analysis conclusions are as follows: parents’ income inequality has a significant impact on the children’s income inequality. There is dominance relation at the first order between the children of wealthy families and children of poor families,the children face a serious opportunity inequality. The intergenerational income elasticity changes from 0.24 to 0.22 in china. There is a significant difference between urban and rural areas. The intergenerational income mobility in rural areas was significantly lower than urban areas. The intergenerational income mobility of young children is the weakest, and the intergenerational income mobility of the eldest children is the most strongest; the contribution of opportunity inequality to income inequality is about 20%; the impact of opportunity inequality on income inequality in rural areas is much greater than cities, and the opportunity inequality of 30 to 35 years old scripts generation contribute the most to income inequality; the income inequality between groups caused about 60% of the income inequality; the decline of opportunity inequalityis caused by the decline of the elasticity of income between generations, which is more than the increase of the income inequality of the parents from 1989 to 2011.Promoting equality of opportunity, reducing the intergenerational transmission of income inequality is an important means to reduce the income gap between the sub generation. Thus, we put forward the following policy recommendations: firstly,eliminate employment discrimination, get rid of the “relationship” in employment,ensure more equitable employment opportunities; secondly, government need increase efforts to transfer payments and taxes, improve the income of low-income families and transfer high-income families income, get rid of the “Matthew Effect” in income distribution; finally, strengthen investment in education, improve public education policy, ensure a fair starting point, prevent the emergence and expansion of the income gap in the future.