Research on intergenerational transmission of Chinese residents’ income: Based on data from ten surveys of Chinese Family Tracking Survey from 1989 to 2015

Abstract

This article uses the rank-ordered probit estimation method and data from the 10 Chinese Family Tracking Survey from 1989 to 2015 to systematically study how the family background, especially the parental income, of urban and rural residents in China since its opening affects the intergenerational transmission of income and income inequality. The results show the following: ① The higher the income of parents is, the higher the income of their offspring. When parents are middle income or above, the probability of their children earning an upper-middle or high income increases significantly. ② Although the income of mothers is low, its impact on children’s income is greater than that of the father’s income. If the mother’s income is middle, upper-middle, or high income, it will increase the probability of her children earning a high income by 12.17%, 28.16% and 45.90%, respectively, while the corresponding influence from the father’s income is 9.62%, 20.69% and 43.82%. ③ For children, the degree of intergenerational income inequality is greater for women than for men, and it is higher in cities than in rural areas. ④ The intergenerational transmission of income is persistent across multiple generations, but the transmission from parents is much higher than from grandparents. It is also difficult for the offspring of a lower-income couple to obtain a higher income. These conclusions are robust to examining different samples and examining the predicted impact of various measures of family background on the income of offspring. Based on the results, this article puts forward policy recommendations to improve intergenerational income consolidation and reduce income inequality.