Research On The Influence Mechanism Of Credit Constraints On Intergenerational Income Mobility Of Rural Residents In China

With the rapid economic development and the deepening of China's economic system reform,people's living standards have also been greatly improved.However,the income gap among Chinese residents is also widening.Many scholars begin to measure the degree of income inequality from the perspective of intergenerational income mobility.Simply speaking,intergenerational income mobility refers to the change of the generational income class relative to the parent income class.The higher of intergenerational income mobility means that the child's lifetime income is less depend on their parents' lifetime income than their own ability.Popular speaking,it so-called that "farmers who farm in morning go into the emperor's palace at night";on the contrary,the lower of intergenerational income mobility is so-called "dragon are born dragon,phoenix are born phoenix,mouse's son can burrow".The higher of intergenerational income mobility is not only the manifestation of social dynamic justice,an important guarantee for the efficient operation of social economy,but also the core factor to avoid the "middle-income trap" in China.The domestic research on intergenerational income mobility began in the late 1990 s,and mainly concentrated on the measurement of intergenerational income elasticity and the explaination of human capital on intergenerational income mobility,while ignoring the impact of credit constraints of a transferring mechanism.At present,foreign literature showed that credit constraints affect intergenerational income elasticity.When household borrowing is not constrained,rich farmers can smooth consumption by borrowing,for the child' human capital investment from their parents reach to the optimal value,therefore,it changed their ability of earning income in the future.As far as the status of credit constraints are concerned,most studies show that the rough phenomenon of capital borrowing is still frequent in our country,especially in rural areas.Based on the above,the direct question we are facing is: what is the degree of credit restriction in China? Will credit constraints inhibit intergenerational income mobility? What is the difference between the income classes and the regions? If the credit constraint intergenerational income mobility,then what is it influence path?Firstly,this paper analyzes the influence of credit constraints on intergenerational income mobility and its influence mechanism,and it puts forward the corresponding hypothesis.To construct an overlapping generations model theory,if the credit constraints do not exist,the rich and poor parents can be the best human capital investment,the income of the offspring is also optimal.However,when credit constraints are taken into consideration,the investment in the human capital of the father of the middle income class declines,the mobility is strong,the mobility at both ends is weak,and the wealth of the family is polarized.When the credit constraints are further strengthened,intergenerational mobility of the middle income class is weakened,and the polarization of household wealth is deepened.Secondly,based on the CHIP2013 rural database,this paper analyzes the credit constraints faced by farmers in China,and empirically analyzing the influence of credit constraints on intergenerational income mobility of farmers.The results showed that about 30.81% of rural households are constrained by capital borrowing.The proportion of offering credit demand to financial institutions or relatives and friends is small,and most of them can fully meet the needs of the farmers,and the most of them did not raise lending because there is no need for funds.Credit constraints does not always have a negative impact on intergenerational income mobility,but showing the effects of nonlinearity.It inhibit intergenerational income mobility in the low and middle class,and the inhibitory effect decreases with the increase of income class,moreover,the influence in the lowest and highest class is not significant.In addition,the intergenerational income elasticity is non-linear,with a "U" type structure with the increase of income class.The largest intergenerational income elasticity is the 10% quarter of generation income,the smallest one is in 75% points,and slightly increased in the 90% quarter.In the study of regions,credit constraints in east and central parts does not significantly affect the intergenerational income elasticity,and it only in the western region increase significantly correlation between offspring and parent income,and inhibiting of intergenerational income mobility.Finally,using the cross terms of credit constraints with parants income and human capital,the paper is also decompose the path of credit constraints affect the intergenerational income elasticity.It analyze empirically the impact of credit constraints on intergenerational income by monetary capital and human capital.The results found that the explanatory power of the intergenerational income elasticity of monetary capital occupies the main position,and human capital's is the subordinate.And with the increase of the social class,the former was "U" type structure and is the lowest in the 50% quarter.After further research about credit constraints transfer mechanism of intergenerational income,it finds that credit constraints promote the low and middle income class monetary capital transfer path,and reducing rates of return to human capital in the lowest coefficient of low-income and low-and-middle-income classes,thereby inhibiting the transfer indirectly path of human capital.In the study of regions,it also explain the intergenerational income elasticity of monetary capital occupies the main position,and the credit constraint mainly promote the direct path transfer,and resulted in inhibition of intergenerational income mobility of the western region.