An Empirical Research On Income Mobility In China

The economy in China has expanded with a speed of average10percent a year during1978-2011. Per capita disposable income of urban residents and net per capita income of rural residents increased sharply. Meanwhile, The Gini coefficient of Chinese residents’ income increased from0.317in1978to0.468in2009, and has been close to the warning line-0.5.It has seriously affected the healthy development of China’s economy. Scholars argue income inequality from a static perspective is necessary, but there are some limitations to measure the degree of income inequality in a country using the Gini coefficient only. It may even cause distortions to inequality in the long-term. The income mobility refers to changes of the order in income levels or income of a person or a particular income group in the income distribution of all the people. Income mobility examine income inequality from a dynamic perspective. It makes up for the defects of the annual income gap measure indicators. When there is a larger income mobility, particularly when the upward flow is greater than the downward flow, even if the gap between the annual revenue is large, the long-term revenue gap will tend to be significantly reduced. The research on income mobility has positive significance to analysis of long-term income gap and the formation of a rational income distribution structure. The existence of income mobility makes it possible to change the status quo through self efforts-raising the relative income levels, changing economic status, narrowing the income gap. This paper analyzes the factors that affect income flows, explores ways to form a reasonable mechanism of income mobility. Then it puts forward appropriate policy recommendations from the perspective of equalization of opportunities, and it is of actual significance to reduce long-term income gap in China.Based on the background and significance of the research, starting from the systematic literature review of income mobility, the thesis gives accurate definitions of income mobility and establishes the basic framework of the research. And then it examines the significance on promoting equal opportunities, improving social welfare, narrowing the income gap. Specific structural arrangements are as follows:Chapter1, Introduction. It introduces the background and significance of the research, lists the structural arrangements of this article;Chapter2, the literature review. By reviewing the domestic and foreign literatures of income mobility, it points out the problem on the measurement of income mobility, analysis of influencing factors and its effects in the existing research, finds the entry point of this study.Chapter3, the theoretical framework of income mobility. This chapter analyze the construction of income mobility under the relative, absolute and welfare perspectives. Then it examines the impacts of relative income mobility factors starting from the theory of human capital and population economics. By decomposing the absolute income mobility, it identifies its sources and influencing factors preparing for Empirical Study of Chapter4.Chapter4, the empirical research of income mobility. With the screened and matched CHNS data and the theoretical framework constructed in Chapter3, this part analyzes the trend of changes in income mobility from the country, urban and rural level respectively, and finds out its influencing factors by decomposition and constructing econometric models.Chapter5, conclusions and policy recommendations. This part summarizes the empirical results of this paper, and make policy recommendations, points out the deficiencies of the article and directions for further research.The main conclusions in this paper are:income mobility of rural and urban residents are significantly different; in contrast to the urban residents, rural residents’ relative mobility is stronger, the trends of the relative mobility are just opposite; income mobility in China is weaker than in earlier periods; the strengthen of residents income mobility contributes to raising the level of social welfare and narrowing the income inequality.There are two innovative points of this article:first, through systematical review of the literatures on income mobility, identifying defects of the researches and supplementing the existing literature,construct a more comprehensive research framework; Second, this paper studies the income mobility from relative, absolute and welfare perspective,so it can give a more comprehensive descriptive of the Chinese income mobility. Then, it analyzes the influencing factors by constructing econometric models and decomposition of indicators. The deficiencies of this paper are:First, after screening and matching samples, a large number of samples are excluded from the population, which may have a certain impact on the representative of the findings; As there are many missing values and variables in CHNS database, so many potential factors can’t be chosen from it,which may affect the the analysis of income mobility. Second,in the multinominal logit model regression, some coefficients are not significant in multiple periods,but due to the lack of real panel data,modeling requirements are improved, this article can only select the model as an alternative. Third, the paper just analyzes the effects of income mobility to income inequality in the long-run equilibrium index, which can’t not fully identify the extent of its influence and impact.