The Determinants of Household Income Mobility in Rural China

This article uses multivariate regression and decomposition analyses to assess household income mobility determinants and their contributions to income mobility in rural China from 1989 to 2006 using panel data from the China Health and Nutrition Survey (CHNS) database. The findings reveal that households with low initial income level, high share of wage income, high educational level of household members, high number of employed household members, and younger heads are more mobile. Moreover, besides initial income, change in the share of wage income, change in the share of the number of employed household members, and change in average year of education of household members are the most important variables that account for income mobility among rural households. As we separate households according to initial income ranks, we also find the primary importance of these change variables in accounting for income mobility among the initially rich. While changes in the share of wage income and the share of the number of employed household members remain consistently important contributors to mobility among the initially poor, change in the average years of education is less important for the poor than for the rich. These findings necessitate more emphasis on policies that promote employment and education to enhance household income mobility in rural China.