An Empirical Analysis Of Income Mobility In Rural China

Since the reform and opening, along with China's surprising rapid economic growth, the income inequality was expanding constantly, and China has been a country with high income inequality. Meanwhile, during the past quarter of a century, China has realized the largest scale of poverty reduction, and because of the huge poverty population, China is still the second largest poverty population country in the world, but also the speed of poverty reduction was decreased in the most recent ten years. Except caring for equality is the common characteristic of the Moral Philosophy, more importantly, recent research demonstrates that the effect of high income inequality on growth is negative, also for the effect of anti-poverty. Therefore, how to promote national economy increasing fast and steadily by combining fairness considered has become the focus of many scholars and policy makers.The overall objective of this study is to explore possible new approaches for realizing economic growth with fairness considered. This study holds that income mobility is beneficial to promote the equalization of long-term income, and enhance the positive effect of economy growth on anti-poverty, thus realizing economic growth with long-term income fairness considered. Through constructing the frame of income mobility—promoting equalization of long-term income, enhancing the positive effect of economy growth on anti-poverty—economy growth with long-term income fairness considered, this study analyzed the income mobility in rural China from 1988 to 2003, mainly analyzed the positive effect of income mobility on promoting equalization of long-term income and anti-poverty. Base on these works, this study further analyzed the influencing factors of income mobility, and provided the decision support for realizing economy growth with long-term income fairness considered. The tentative conclusions of this study are: 1. Though a certain fluctuation existed, from the global aspect, the income mobility in rural China was rising constantly form 1988 to 2003. This has a very important meaning under the realistic background that income inequality has been getting more and more. The difference of income mobility among different rural household groups, between rural and town was significant, but the tendency of income mobility for all groups was same. After 1996, the characteristics of selectivity and uncertainty, which the demand of peasant workers and agricultural products for urban development has, was the main reason of promoting the increase of income mobility in rural China. While, the income fluctuation maybe result the increasing of income mobility in town, which was caused by laid-off and reemployment in the state-owned enterprises.2. Income mobility has forcibly promoted the equalization of long-term income for rural household; it is the mean reason that caused the income distribution was more equal in the long-term. But after 1996, with the constant enlargement of income equality, the decrease of the equalization degree of long-term income after 1996 was caused by the improvement degree of income mobility was lower than the decreasing degree of income distribution. If this trend will continue in the future, it can be predicted that the income stratified structure in rural China will gradually stabilized, and the long-term income inequality will be gradually enlarged. Therefore, it will be an important subject needed to resolve as soon as possible that how to control the enlargement of income equality by combining striving to improve income mobility considered for government.3. Because of the positive effect of income mobility on anti-poverty, the state of poverty in rural China was mostly temporary poverty. The phenomenon of exiting from and slipping into poverty was very common, and it has the following characteristics:most of the household that will escape (or slip) poverty in the next investigating year was located near the poverty line; there existed a significant difference on the possibility of exiting from or slipping into poverty between different income levels household in poverty or non-poverty, the household near the poverty line has a more possibility to escape or slip poverty in the next investigation year; the poverty or non-poverty household mostly located near the poverty line after escaping or slipping into poverty; the poverty household didn't had strong capacity of maintaining the state of non-poverty after exiting from poverty, meanwhile, the possibility of escaping from poverty for the household that slipping into poverty was higher than the household had been in poverty long before.The positive effect of income mobility on anti-poverty is very important, especially under the condition of the speed of decreasing poverty in China decreased somewhat. But, it must be treated that the positive effect of income mobility on anti-poverty has limitation, which has positive effect for specific population (especially for the poverty population near the poverty line), it can't solve the China's poverty radically. Economy growth, equitable distribution of income and powerful anti-poverty measure is still the effective measures for anti-poverty completely, while income mobility can make it more perfect.4. It was found that education, the amount of household land, initial income status and geographical location, especially the proportion of non-agriculture income have significant effects on the household income mobility in rural China. A higher education can decrease the possibility of downward income mobility, while the improving of the familial per capita average agrarian area and the non-farm income rate can increase the possibility of upward income mobility. The non-farm income plays an important role in income mobility, it means that on the base of creation more non-agricultural employment opportunities has been taken as the important work, government should pay more attention to the peasant workers'vocational education and employment skill training, shoulder more responsibilities for providing employment information, and provide a fair environment of acquiring non-agricultural employment opportunities. It can not only increase peasants' income, but also improve the peasants'long-term income inequality, so as to promote the harmonious and stable development of economy and society in rural areas.At last, we put forth policy suggestion on how to realize economy growth with long-term income fairness considered such as improving income mobility on a reasonable level; controlling enlargement of income equality in rural China; making the very poor population as the important work in the future poverty relief work; integrating and perfecting rural-urban labor market and social security system, providing an institutional conditions of market economic environment of perfect, mature and fair competition.