Intergenerational Transmission Of Human Capital And Its Influence On Income Mobility:Measuring With Ability

Since the implementation of the reform and opening-up policy,the economy of China has experienced a miraculously rapid growth.In the process of moving into middle-income countries and continuing climbing upwards,China is faced with not only the increase in economic aggregates and human capital,but also the more serious problem of the widening income gap and the decreasing social mobility.The principle of priority to efficiency and the consideration to fairness makes the loss of fairness in the process of pursuing efficiency,which will eventually affect the efficiency.The way that relatively vulnerable groups in the society improve their economic status is hindered and opportunities are scarce.This not only violates social fairness and justice,but also practically reduces the willingness of people to continue to invest in human capital.As human capital is the driving force of modern society,the reduced willingness of the private sector to accumulate human capital will lead to long-term negative impact on the economic development.The composition of national wealth given by the World Bank grouped by income shows that human capital is the most important capital composition in most countries today.According to the human capital theory,the underlying reason for the lower intergenerational income mobility is the high consistency of human capital intergenerational transmission,which is the reproduction of human capital level from the father to the offspring.Therefore,it is necessary to take the intergenerational transmission of human capital as the main research object in order to explore the intergenerational transmission mechanism of human capital and its contribution to intergenerational income elasticity.This paper believes that based on the application of behavioral economics in the research results of psychology and social cognitive theory,there are theoretical conditions for more comprehensive measurement of human capital and empirical conditions supported by micro-databases.The measurement of human capital extends to capabilities.Corresponding to this is the co-existence of direct and indirect transmission of human capital between generations.The intergenerational income mobility is further reduced and the human capital contributes more to intergenerational income elasticity considering the direct transfer of human capital.Therefore,in order to improve the intergenerational mobility,it is necessary not only to depend on human capital investment to accumulate human capital for the residents of our country,especially for the disadvantaged groups in backward areas,but also to pay attention to the important role of direct transmission of human capital between generations.This paper is divided into six parts.The first chapter is the introduction,which introduces the background of the topic,the purpose and the significance of the research,and extracts the innovation of this paper.The second chapter is literature review.It summarizes the main researches related to the development of human capital theory and its measurement,the intergenerational income mobility,and the intergenerational transmission of human capital.It provides a theoretical basis and empirical reference for expanding the measurement scope of human capital and studying its transmission mechanism and contributions.In the third chapter,the individual ability is subdivided into cognitive and non-cognitive capabilities.By combing the development of cognitive and non-cognitive capabilities and their conceptual coverage,this paper selects appropriate and available capabilities for both levels of competence.The use of the CFPS cognitive ability test,interviewer observation data,and Big Five personality based on the CFPS psychometric questionnaire component are introduced to the Mincer income equation.It is necessary to include ability into measurement of human capital through exploring the income returns of cognitive and non-cognitive skills.The non-cognitive ability measured by this method is more reasonable.The empirical test results show that there are differences in socio-economic and physiological functions in the development of individual abilities.Both cognitive and non-cognitive capabilities have a significant predictive effect on income,and cognition and education are more relevant.The forecasting effect of non-cognitive ability on income cannot be replaced by education level.In the fourth chapter,this paper chooses education,health,and non-cognitive ability as the three dimensions of measuring human capital.By introducing the direct and indirect transfer mechanisms of human capital from the parent generation to offspring to the basic framework of the overlapping generation model,it derives the optimal human capital investment in human capital indirectly transmission.It also derives the difference in the intergenerational income elasticity between the direct and indirect transmission of human capital through the different mechanisms of action under the two transmission paths.It is concluded that the intergenerational income elasticity is underestimated excluding the direct transmission of intergenerational human capital.In the empirical test part,this paper establishes the OLS model and the simultaneous equations corresponding to the indirect transmission and direct transmission of the intergenerational human capital of the theoretical model,and uses the CFPS data to test the derivation of the theoretical model.The direct transmission of human capital across generations exists and is significant.The empirical data verify that only considering indirect transmissions underestimates the intergenerational income elasticity.Using CFPS data to conduct empirical tests,and by replacing the indicators of the main explanatory variables,the regression analysis of fine molecular samples and other methods to verify the conclusion of the model is robust.In chapter 5,the basic situation and heterogeneity of intergenerational income mobility are more detailed analyzed,and the income mobility of different groups is compared in different regions,generations and income levels.In the aspect of Intergenerational income elasticity,the east is greater than the west,the 1980s and 1960s generations present a bigger intergenerational income elasticity than the 1970s,the offspring income quantile regression shows that intergenerational income elasticity decreases with the increase of income,the characteristics of the parent income group did not reflect the results of single direction with income.The transition probability matrix of parent and offspring income reflects their relative position changes.It presents that high income group of intergenerational income at the ends of the elastic,the intergenerational income elasticity is higher for low-income rural inhabitants and the city high-income residents.Through the transformation of the conditional intergenerational income elasticity method,Blanden decomposition method,and Bowles&Gintis decomposition method,this paper further explores the role of human capital in intergenerational transmission.The contribution of each dimension of human capital to intergenerational income elasticity is generally above 30%.The contribution of education to intergenerational income elasticity is the largest,followed by non-cognition,and health is not the main variable that restricts individual development due to the general increase in economic level.The sixth chapter summarizes the main conclusions of the theoretical and empirical analysis of the main part of the article.According to the conclusions,it proposes targeted policy recommendations and enlightenment for each participant.For the family aspect,human capital investment should focus on the balance between education and ability.On the one hand,parents should pay attention to the cultivation of their own abilities and create a basis for the direct transmission of human capital between generations and set an example for their children.Schools should continue to implement quality education,taking into account the cultivation of cognitive and non-cognitive skills,and focus on the personality shaping and mental health condition of students.Society should promote the balanced allocation of educational resources and medical resources,break down the divisions and barriers between urban and rural areas,and regions,thereby increasing intergenerational income mobility.Finally,it summarizes the limitations of this study.The innovation points of this paper are mainly reflected in the following three aspects:Firstly,this paper takes individual ability into consideration in the measurement of human capital.Through the use of the CFPS Microdata Psychometric Scale,this paper entirely measures the five dimensions of Big Five personality including openness,conscientiousness,extraversion,agreeableness and neuroticism.This paper conducts a correlation analysis of intergenerational human capital transfer by examining each dimension's return on individual income,or constructing a comprehensive index representing non-cognitive ability and measuring the individual non-cognitive ability as a dimension of human capital.Secondly,because of the introduction of ability in the measure of capital ability,combined with the ideas of genetics,behavioral observation,or imitation in behavioral economics,in the ntergenerational transfer of human capital,in addition to indirect human capital investment,this paper adds direct transmission model of human capital and verifies the three dimensions of human capital including education,health and ability all have direct transmission from the father to the child,not only health.Thirdly,on the basis of the first two innovations,when analyzing the contribution of human capital to intergenerational transmission,this paper makes necessary changes to the the method of decomposing intergenerational income elasticity.In the study of intergenerational human capital,it implies a chronological or causal relationship in which the parent's income or human capital occurs first,and the transmission to the offspring occurs later.Therefore,it is not appropriate to discuss the contribution of human capital to intergenerational communication only from the offspring's human resources without including the direct transfer of parent human capital to offspring human capital.