Intergenerational Income Elasticy and Regional Difference

We use records of incomes in census 2005 and China City Yearbook (1996-2005) of more than 70 thousands children and their parents to describe three features of intergenerational mobility in modern China. First, we characterize the joint distribution of parent and child income at the national level, the conditional expectation of child income given parent income is linear in percentile ranks. On average, A 1% percentile increase in parent income is associated with 0.673% percentile increase in a child’s income. Second, intergenerational mobility varies substantialy across areas within the modern China. For example, the probability that a child reaches the top quintile of the national income starting from a family in the bottom quintile is the highest in Tianjin but the lowest in Nanchang. Third, we explore the factors correlated with upward mobility. (1) the coastal and developed areas; (2) the areas with more universities and low student-teacher ratio primary and high schools; (3) the areas with less minorities; (4) old revolutionary base areas.