Theoretical Model And Empirical Analysis Of The Impact Of Public Education Financial Expenditure On Multi-generational Income Mobility

With the deepening of the reform and opening up,the people’s living standard has been improved day by day,but the income inequality as measured by the income Gini index is becoming more and more obvious,which has become an important factor hindering social equity.Intergenerational income mobility is a dynamic indicator of the degree of social equality,which refers to the extent to which the previous generation of income affects the income of the next generation.In recent years,relevant studies generally show that there is a significant shortage of intergenerational income mobility in China,and the intergenerational solidification phenomenon characterized by the "second generation phenomenon" is serious,which has attracted wide attention from the society.The financial expenditure of public education at the government level is the key means to adjust the income inequality between generations and then affect the intergenerational income mobility.At the same time,considering the strong family consciousness in Chinese society and the common phenomenon of intergenerational rearing,the income of the son generation is also deeply affected by the income of the grandparent generation.Based on this,this thesis constructs the multi-generation income mobility model from the substitution effect of public education financial expenditure on intergenerational income mobility,and analyzes the effect of different types of public education financial expenditure on multi-generation income liquidity and its effect on the liquidity of intergenerational income,constructs the regression analysis model,collects relevant data to verify the theoretical results and the actual situation of income in China.This thesis based on Solon(2014)multi-generation income mobility model,combined with Becker et al.(2015,2018)substitution effect and supplementary effect model of public education financial expenditure,and constructed a theoretical model of multi-generation income mobility,including the substitution effect and supplementary effect of public education financial expenditure.The theoretical analysis shows that the increase of public education financial expenditure with substitution effect and supplementary effect can reduce the influence of parental income on grandparental income and promote the intergenerational income mobility.Which has substitution effect of public education fiscal expenditure to promote intergenerational income mobility increase is by improving the government fiscal expenditure of human capital investment relative progressive effect,and has supplementary effect of public education fiscal expenditure,promote the intergenerational income mobility increase,is by improving the relative progressive effect and government fiscal expenditure into the generation of human capital elasticity coefficient product,and reduce the children generation of human capital into the generation of income elasticity coefficient.At the same time,the financial expenditure of public education has substitution effect on the investment of human capital investment,which brings the increase of human capital investment;the financial expenditure of public education with supplementary effect increases with the total amount of human capital investment.In addition,when considering the grandparental income on children income,between parent-children the intergenerational income elasticity coefficient is the original income elasticity coefficient between the parent and the children of the degree of altruism and the parent and children income elasticity coefficient for the grandparent income elasticity coefficient and the parent of the degree of altruism.Secondly,based on the Chinese Family Panel Studies(CFPS)2020,China Education Finance Statistical Yearbook and the statistical Yearbook of various provinces and cities,the sample data of public education financial expenditure during the children generation and the parent generation and the corresponding regression analysis model are constructed,the regression results using the two-stage least squares method show that the public education financial expenditure promotes the intergenerational income mobility,and the influence of the children generation in the high school stage is the most significant;next,compared with the impact of public education financial expenditure with a supplementary effect,the financial expenditure of public education with substitution effect affects the increase of chilren income and the decrease of parent income more significantly.Using the intergenerational income transfer matrix method to explore the changes of different income grades between grandparent,parent and children generations,the study shows that the income solidification degree of women,urban areas and central and western regions is higher than that of men,rural areas and eastern regions.Subsequently,the tool variable method was used to calculate the elasticity coefficient of intergenerational income in China,including the two generations and the multi-generations,and through gender and urban and rural areas,it was concluded that the intergenerational income mobility of men and children generations in rural areas was higher than that of women and children generations in urban areas respectively Then,the intergenerational income elasticity coefficient was calculated for the birth age groups and important years(1978 —— college entrance examination recovery;2006 —— universal compulsory education),so that the improvement of education policy can effectively promote the accumulation of human capital and then promote the intergenerational income mobility.According to the above empirical analysis results,this thesis puts forward some suggestions to improve the financial expenditure policy of public education and improve the liquidity of intergenerational income mobility: firstly,the government should further increase the proportion of financial expenditure in public education to improve the national education level;secondly,rationally allocate resources to increase the investment policy preference of public education finance in underdeveloped areas;finally,increase the public education financial expenditure for vulnerable families and women to increase the accumulation of human capital.