Intergenerational Income Mobility in China and Underlying Mechanism

Based on ten rounds of CHNS data from 1989 to 2015, this paper employed dual measurement indicators of the intergenerational elasticity(IGE) of earnings and the income rank association(IRA) coefficient to measure intergenerational income mobility in China. Our findings suggest that China’s intergenerational income mobility was relatively stable from 1991-2004 and started to increase after 2004. Our study based on income grouping found that the intergenerational income immobility decreased after 2004 for all income groups; however, the high-income and low-income groups were far more immobile than other income groups; the middle-income group served as a key driver of the relatively high intergenerational income mobility in China. Furthermore,we investigated China’s intergenerational income transmission mechanism with a human capital analysis framework. We found that fathers’ non-education factors played a dominant role in intergenerational income transmission; under the effects of the social institutional environment, the non-education transmission mechanism started to diminish after 2004,significantly contributing to intergenerational income mobility.