Research On Informal System,family Fertility Preference And Intergenerational Transmission Mechanism Of Income Inequality

This paper is a milestone and an important part of the general project of the National Social Science Fund General Project: Research on Blocking the Intergenerational Transmission Mechanism of Income Inequality(21BJL014).At present,the phenomenon of income inequality and its intergenerational transmission in China has become increasingly prominent,and the government’s exploration of solving this problem in fiscal and taxation policies has never stopped.However,the final goal of any policy is still the microsubject,so the public expectations formed by the long-term evolution of different informal systems will have different directions and different degrees of influence on the actual fiscal and taxation policy effects.Some informal systems themselves have the function of regulating income distribution.For example,the "clan network" formed after thousands of years of evolution can achieve a certain degree of economic mutual assistance under the action of various implied contractual relationships.However,to what extent this mutual assistance effect can reduce income inequality,and how the birth preference formed under the contractual relationship will affect the intergenerational income inequality transmission,these issues may have an impact on whether the fiscal and taxation policies can play the expected role to some extent.Therefore,it is of great significance to explore the adjustment effects of different informal systems while discussing the adjustment effects of government fiscal and taxation policies on income gap.This paper attempts to reveal the effect of the informal system on the intergenerational transmission of income inequality and to test the mechanism of the role of fertility preference as one of the core of clan culture.(1)To review and evaluate the current status of relevant domestic and foreign research,define the relevant concepts and select the indicators to be used subsequently,and elaborate the relevant theories.(2)To investigate the role of clan networks in the intergenerational evolution of inequality by constructing an iterative intertemporal model that includes clan networks and reproductive choices,using clan networks as a proxy variable for informal institutions.(3)To measure the clan network culture in China at different levels;to measure family fertility preferences using micro data and macro data respectively;to analyze the trends of income inequality in major countries in the world and China in the last two decades;and to analyze the intergenerational transmission of income inequality using different measurement indicators and based on different levels.(4)Based on the China Family Tracking Survey(CFPS)2010-2020 data,we use the CFPS database to empirically test the impact of clan networks as informal institutions on the intergenerational transmission of income inequality at the village residence level and district and county levels,respectively,based on the construction of proxies for clan networks and the intergenerational transmission of income inequality,and conduct a series of robustness tests using the instrumental variables approach(IV)to address the endogeneity of clan networks and test the intermediate mechanism of clan networks on the intergenerational transmission of income inequality using the number of births as a proxy variable for household fertility preferences.(5)To provide empirical data for tax system reform and related public policy design to reveal the policy space for tax system reform.The main conclusions of this study are as follows:(1)The results of the theoretical analysis show that the introduction of a shock based on the inequality in the initial distribution of human capital will lead to the continuation of the inequality in the initial distribution along the equilibrium growth path;whether the "clan network" can generate a human capital growth path depends on the degree of transmission of human capital from the father to the offspring and the ability of the "clan network" to generate a human capital growth path depends on the sum of the degree of human capital transfer from the father to the offspring and the contribution of "clan capital" to the offspring.(2)The results of the characteristic facts show that: clan network culture exists at both village and household levels,and almost half of the sample values the traditional concept of "passing on the clan" at the individual level;macro data show that China’s total fertility rate has been below the population replacement level for more than two decades,and micro data show that there are some differences in fertility levels across provinces.The macro data show that China’s total fertility rate has been below the population replacement level for more than two decades,and the micro data show that there are some differences in fertility levels across provinces,with rural fertility levels higher than urban fertility levels;income inequality exists to some extent in all countries in the world,and China’s income inequality is at a high level in the world;the intergenerational transmission of income inequality is higher at the village level than at the district and county levels,and there are differences in absolute intergenerational mobility across provinces,but the differences in mobility across classes are not significant..(3)The empirical results show that clan networks increase the intergenerational transmission of income inequality,whether using district and county-level data or village-dwelling-level data.The robustness tests of the replacement measures and other years of data as well as the results of the instrumental variables approach indicate the robustness of the benchmark estimation results.The results of the mechanism test suggest that clan network ties have a strong influence on the fertility choice behavior of households in their region.China is a traditionally relational society,and informal institutions such as clan networks have a significant influence in determining people’s behavioral choices.This study provides empirical support for the interaction between traditional organizations in rural areas of China,such as clan and intergenerational transmission,and also has certain reference significance for alleviating the widening income gap and fertility policy in China.Under the informal system of China’s established traditional culture,this study has theoretical guiding significance for the effective implementation of relevant public policies,especially for the implementation of individual income tax’s maternity incentive policy.