Study On The Intergenerational Income Mobility Of Chinese Urban And Rural Residents

Since 30 years of reform and opening up, China has achieved rapid economic growth, the income level also increased dramatically, but at the same time the income gap is expanding simultaneously too. The excessive income gap problem becomes a hot topic which is concerned widely at home and abroad, therefore relevant policy-makers and economists have done a lot of researches on this problem from different perspectives. There are various forms of income gap in China, such as income gap between urban and rural, income gap between different regions, income gap between various industries. While studying income distribution from the micro-level, the income gap between different families is a very important form of representation. In the analysis of income disparity between different families, it is no doubt that this issue should be focused on different families from the same generation, but on the other hand, income disparity between different generations, which we call the intergenerational income mobility, should also be stressed. However, in the former studies, the common way to measure the income gap is using Lorenz Curves, Gini Coefficient and Theil Index. Although the use of these methods is very important to understand the extent and change of income gap, it cannot explain the reasons why this income gap situation is formed and why income gap is changed.Intergenerational income mobility is a measure of the extent to which a person's income is determined by the income of the previous generation. The elasticity of intergenerational income is generally used to measure this mobility of intergenerational income. The elasticity of intergenerational income is the elasticity of the offspring's income to their parents. The greater intergenerational income elasticity a society has, the smaller intergenerational income mobility the society is, thus the higher degree of a social's inequality is and vice versa. The analysis of intergenerational income mobility is the supplement to Lorenz Curve,Gini Coefficient and Theil Index, which are all static indexes. The research of intergenerational income mobility makes it possible to analyze the income distribution from a static perspective to a dynamic one. In the research of intergenerational income mobility, not only the degree of inequality in income distribution is analyzed, but also the mobility of the degree of inequality is examined, especially the changes of the inter-generational inequality extent must be studied, that is whether or not the income inequality faced by parents affected the offspring and to what extent the degree of the influence is.At present, we all want to know a lot of information about intergenerational income mobility of our country. Such as how extreme is the extent of people's intergenerational income mobility? What is the relationship between them, and what is the path of the mobility, and through what channels can effectively increase people's intergenerational income mobility, especially upward intergenerational income flowing to prevent the intergenerational transmission of poverty, thereby reducing the urban-rural income inequality? The analysis and the solutions to these issues contribute to a comprehensive understanding of the current phenomenon of China's widening income gap, which is of great significant to narrowing the urban-rural income gap, to prevent intergenerational transmission of poverty and to enhance social justice and harmony.This paper first measures the intergenerational income elasticity of China's population, and on this basis, an in-depth study of intergenerational income residents of the mechanism behind the transmission is analyzed; and then this paper also analyzed the relationship between the income and the intergenerational income mobility. We also illustrate the reasons of the income gap growing from a dynamic perspective to find out how to increase people's intergenerational income mobility and to prevent the inter-generational transmission of poverty. Finally we put forward some relevant policy recommendations. The full-text is divided into seven parts; the main research contents include the following three aspects:Part 1:Through measuring intergenerational income elasticity of the urban and rural residents, we get the trends of intergenerational income mobility. From this outcome, we can understand the status of Chinese's intergenerational income mobility at the present stage and compare the intergenerational income mobility differences between the urban and the rural. The results show that:First, the intergenerational income elasticity of Chinese urban and rural residents is high. For the trend of the mobility, the income distribution of overall sample presents a closed property of intergenerational mobility. Second, the intergenerational income elasticity shows significant regional differences, the inter-generational income elasticity in the eastern and central is significantly higher than the western. For the trend of the mobility, the three regions at both ends of the income distribution groups intergenerational income mobility are relatively close, but from the east to the west, the intergenerational income elasticity of high-income offspring is increased, while the intergenerational income elasticity of low-income offspring is decreased, this indicates that the mobility within the eastern region are more frequently. Thirdly, compared with the low-income group, the offspring's income of the high-income group is more influenced by their parents. As to the terms of the trends from the inside, on one hand, the extreme ends of the high-income group's income distribution is higher, but the trends of is relatively more active. On the other hand, the income distribution of the lowest end of the low-income sample is higher, while the internal mobility is relatively inadequate.Part 2:Based on the persistent income, we use the intergenerational income transfer income decomposition method to analyze the mechanism of intergenerational transmission both from the Linear regression perspective and the Quantile regression perspective. We divide the mechanism of intergenerational transmission into 12 paths, and we also analyze the intergenerational income transmission path of different regions and different income groups. The main conclusions are as follows:First, social capital is the most important factor that influences the intergenerational income transmission, followed by education, while health investment has the minimal impact. Secondly, compared with the rural area, social capital and education have a greater contribution to the intergenerational income transmission in urban area, but in the rural area, health contribute much more to intergenerational income transmission than the urban area. Thirdly, for the eastern region, education has the highest contribution rate to the intergenerational income transmission, followed by social capital, moreover the social capital's impact on the intergenerational income transmission is much lower in the eastern area than in the central and the western regions, but health contribute much more to intergenerational income transmission in the western regions and the central regions than the eastern regions. Fourth, compared with the lower-income group, social capital's influence on the intergenerational income transmission is much higher in the high-income group, indicating that the return of social capital is higher in high-income group than the lower-income ones. The results also show that education levels has a higher contribution to the intergenerational income transmission in lower-income group than the higher-income ones. Fifth, from the total contribution side, social capital, health and education, all these three paths' impact on the intergenerational income transmission is higher in the rural area, the central area, the western area and the lower income group. Sixth, just as the same as the total sample, whether in any income deciles, social capital is the primary factor to its intergenerational income transmission, education is the second and health is the weakest. However, compared with the population who has the lowest income, social capital has a greater impact on intergenerational income transmission for higher-income groups. In addition, the results also show that education and health have a higher impact on income intergenerational transmission of the lower-income group than the higher-income group. Seventh, from the results of the quantile regression, whether it is for the total sample, or for the rural and urban area, or the eastern, central and western regions as well as the high-income and the low-income group, social capital, health and education have a higher impact on the poorest people. In China, the impact of social capital,health and education on intergenerational income transmission decreased with the level of people's income level and the region's economic levelPart 3:In this content, we employ indices and regression analysis methods to explore the effect of intergenerational income mobility to income inequality. this content mainly includes two parts:In the first part, we construct a InterP index to study whether or not the income inequality of the parents will promote the income inequality of the offspring. according to our results:every kind of samples, whether it is father's income of child's income, they all show a "V"-shaped line; Whether the total sample or the urban andrural sample compared to their parents income, income of offspring is worse than their fathers. The index shows that income inequality of parents prompt that of offspring's. In the second part, taking into account of that the P's index calculations have some limitations, this study further uses the simultaneous equations model to estimate the relationship between intergenerational income elasticity and income inequality. The results show that income inequality reduces the intergenerational income mobility, while the lower intergenerational income mobility leads to a further deterioration of income inequality. So, if we want to break the negative impact of opportunity inequality on the income inequality, increasing investment in education, improving the labor market are the necessary measures.