Although China has experienced extraordinary economic growth and poverty reduction over the last few decades, growing inequality has become a key concern. Did economic reforms expand equality of economic opportunities in rural China, or generate inequality? In a recent paper (WPS7316), Shahe Emran and I investigate the equality of opportunity in rural China from the approach of intergenerational mobility.
Intergenerational mobility measures the effect of family background on the economic opportunities and socioeconomics status of children (Becker and Tomes, 1979). It measures the transmission of inequality through the family. How much advantage we inherit from our parent’s status influences the opportunity society provides us as individuals.
Inequality across generations is strongly linked to inequality between different families of the same generation. We can have two hypothetical extreme examples: one is a highly mobile society where a person’s development is irrelevant to her economic circumstance at birth (e.g., the notion of an “American Dream,” which represents a society full of equal opportunity); another extreme is a highly “rigid” society (e.g., the caste system in ancient India, where a child’s fate is already decided when he was born). Most countries lie between these two extreme cases.
In this paper, we present evidence on intergenerational educational and occupational mobility in rural China over a period of 14 years (1988—2002). The central question addressed in this paper is: if we compare two snapshots of rural China, did Chinese rural society on average become more or less economically mobile over time? It is extremely difficult to find income and consumption data of the parental generation, so we use education and occupation as two salient indicators of economic status since they are the two most important determinants for personal wealth.
We find that the intergenerational mobility in educational attainment remained largely unchanged for daughters, and it deteriorated significantly for sons. There is strong evidence of a causal effect of parental education on a son’s schooling in 2002.
The empirical results also show that there were dramatic improvements in occupational mobility from agriculture to non-farm occupations - a farmer’s children were not any more likely to become farmers in 2002, even though there was significant persistence in occupation choices in 1988.
Policy Implications
We find divergent trends in educational and occupational mobility: intergenerational occupational mobility increased dramatically in rural China from 1988 to 2002, and the benefits were distributed equally across gender. In contrast, the intergenerational educational mobility has remained largely static for daughters, while it has become significantly worse over time for sons.
We put forth a number of possible explanations behind the observed pattern in intergenerational persistence which can be explored in depth in future research. On the demand side there was enough demand for rural non-skilled labor, most rural non-farm occupations do not require more than primary schooling, by 2002 education was not a constraining factor for most of the rural children for participation in non-farm activities.
The lack of improvement in educational mobility can be traced to a host of factors including increased direct cost of education, and a higher opportunity cost of continuing in school. Although China adopted legislation in 1986 for a compulsory 9 years of education, its implementation has not been uniform, with rural areas in general lagging behind. Furthermore, greater control by local government over their own budgets has tightened the link between local economic conditions and educational opportunities in villages. The increased cost of education naturally increased the persistence in educational attainment across generations - only the relative rich in rural areas can afford higher education. Another factor that may have contributed to educational immobility is the increasing returns to education in rural China following the economic reform.
Since 2004, the Chinese government has implemented new policies to support rural education, including the “one-fee” policy and fee removal for 14 million students in the poorest communities (Kattan, 2006). For our future research, we will use more recent CHIP data (CHIP 2007 round) to re-examine whether these changes have increased economic mobility in China.
Intergenerational mobility measures the effect of family background on the economic opportunities and socioeconomics status of children (Becker and Tomes, 1979). It measures the transmission of inequality through the family. How much advantage we inherit from our parent’s status influences the opportunity society provides us as individuals.
Inequality across generations is strongly linked to inequality between different families of the same generation. We can have two hypothetical extreme examples: one is a highly mobile society where a person’s development is irrelevant to her economic circumstance at birth (e.g., the notion of an “American Dream,” which represents a society full of equal opportunity); another extreme is a highly “rigid” society (e.g., the caste system in ancient India, where a child’s fate is already decided when he was born). Most countries lie between these two extreme cases.
In this paper, we present evidence on intergenerational educational and occupational mobility in rural China over a period of 14 years (1988—2002). The central question addressed in this paper is: if we compare two snapshots of rural China, did Chinese rural society on average become more or less economically mobile over time? It is extremely difficult to find income and consumption data of the parental generation, so we use education and occupation as two salient indicators of economic status since they are the two most important determinants for personal wealth.
We find that the intergenerational mobility in educational attainment remained largely unchanged for daughters, and it deteriorated significantly for sons. There is strong evidence of a causal effect of parental education on a son’s schooling in 2002.
The empirical results also show that there were dramatic improvements in occupational mobility from agriculture to non-farm occupations - a farmer’s children were not any more likely to become farmers in 2002, even though there was significant persistence in occupation choices in 1988.
Policy Implications
We find divergent trends in educational and occupational mobility: intergenerational occupational mobility increased dramatically in rural China from 1988 to 2002, and the benefits were distributed equally across gender. In contrast, the intergenerational educational mobility has remained largely static for daughters, while it has become significantly worse over time for sons.
We put forth a number of possible explanations behind the observed pattern in intergenerational persistence which can be explored in depth in future research. On the demand side there was enough demand for rural non-skilled labor, most rural non-farm occupations do not require more than primary schooling, by 2002 education was not a constraining factor for most of the rural children for participation in non-farm activities.
The lack of improvement in educational mobility can be traced to a host of factors including increased direct cost of education, and a higher opportunity cost of continuing in school. Although China adopted legislation in 1986 for a compulsory 9 years of education, its implementation has not been uniform, with rural areas in general lagging behind. Furthermore, greater control by local government over their own budgets has tightened the link between local economic conditions and educational opportunities in villages. The increased cost of education naturally increased the persistence in educational attainment across generations - only the relative rich in rural areas can afford higher education. Another factor that may have contributed to educational immobility is the increasing returns to education in rural China following the economic reform.
Since 2004, the Chinese government has implemented new policies to support rural education, including the “one-fee” policy and fee removal for 14 million students in the poorest communities (Kattan, 2006). For our future research, we will use more recent CHIP data (CHIP 2007 round) to re-examine whether these changes have increased economic mobility in China.
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