Far from home: migration, venture and income mobility

Abstract

This work focuses on the role that interregional migration within a country can play in fostering intragenerational income mobility through its effect on households’ participation in business venture. Unique panel data on Chinese households from 2015 to 2019 identifies migration experience and provides detailed information on income and entrepreneurial activities. Our key finding is that migration increases upward economic mobility within cohorts by enhancing opportunities of entrepreneurship, and this pattern is more salient in regions with more severe inequality. Consequently, migrant population in these areas enjoy greater chances when climbing income ladders, which may further alleviate regional income inequality in the long run. The estimation results remain robust when winsorising income, using sub-samples of follow-up households in repeated surveys and altering the scale of income mobility. The analysis in this article, coupled with literature on migration and entrepreneurship, provides a new perspective on how free migration matters in improving intragenerational mobility and longer-term income distribution.