The Trend and Mechanism of Intergenerational Income Mobility in China: An Analysis from the Perspective of Human Capital, Social Capital and Wealth

Abstract

AbstractIntergenerational income mobility is the extent to which children’s incomedepends on their parents. The increasing of intergenerational income mobilitycan relieve the social pressure caused by the income gap and provide the incentivefor hardworking and human capital investment. Using microdata and economicempirical technique, this study analyses the time trend and structuralmechanism of China’s intergenerational income mobility in 1988–2005. Theresults suggest the intergenerational income mobility improves in the early period,then becomes stable and even shows a deteriorating sign recently. Humancapital, social capital and wealth explain more than 60 per cent of the intergenerationalincome mobility in China, with wealth contributing the largest proportion.Promoting education equality, eliminating the labour market segmentationand deepening the market–oriented reform are suggested to help improve theintergenerational income mobility in China.