Intergenerational transfer of human capital and its impact on income mobility: Evidence from China

This paper analyzes theoretically and empirically the impact of intergenerational transmission of human capital on the income mobility in China. We use a three-period overlapping-generations (OLG) model to show that the human capital transfer plays a remarkable role in determining the parent-to-offspring investment in human capital and the intergenerational elasticity of income. We then estimate a simultaneous equations model (SEM) using the 1989–2009 China Health and Nutrition Survey (CHNS) data to verify our theoretical predictions. The results show that (i) human capital, measured by health and education, is directly transmitted from one generation to the next, reflecting the parent-induced inequality of development opportunities among offspring in China; (ii) the estimated intergenerational income elasticity increases from 0.429 to 0.481 when the direct transfer of human capital is accounted for, suggesting that omitting this mechanism would overestimate China's income mobility. Our findings provide policy implications on strengthening human capital investments among the disadvantaged groups, reinforcing reforms that promote equality of opportunity, and improving the efficiency of labor markets in China.     

Parental socioeconomic status and children’s cognitive ability in China

It is widely recognized that intergenerational transmission is one of the primary causes of persistent social inequality. Using nationally representative data, the China Family Panel Studies, this paper is one of the first to comprehensively investigate parental SES and children’s cognitive outcomes in China and moves beyond existing work by accounting for the direct intergenerational transmission of cognitive ability and by examining various novel mechanisms. Our results show that parents’ education rather than income is positively associated with their children’s cognitive abilities. The analysis of mechanisms shows that educational disparity widens the gap in parental investment, as well as parental beliefs regarding education and expectations for their children. Nevertheless, we do not find differences in parenting productivity. In addition, we find that the impact is more prominent in rural areas where education resources are much more limited. Various tests have been performed to prove the robustness of our findings.     

China's human capital investment

This paper discusses human capital investment in China. China's current policies favor physical capital investment over schooling and urban human capital investment over rural human capital investment. Current migration policies discriminate against children of migrants. A more balanced investment strategy across rural and urban regions and types of capital is appropriate. Private funding for education through tuition and fees should be encouraged and can supplement government funding and make schools more financially self-sufficient. However, if this policy is enacted, capital markets for financing education need to be developed to avoid discouraging students from poor families from attending school.     

Unhealthy consumption behaviors and their intergenerational persistence: The role of education

As one of the countries sharing the world's largest population of smokers and drinkers, China has been facing serious health-related problems from smoking and drinking in recent decades. This paper attempts to investigate the impact of education on unhealthy consumption behaviors (smoking, binge drinking, and drinking) and their intergenerational persistence, using data from the China Health and Nutrition Survey (CHNS) for the period from 1991 to 2011. Estimation results suggest that there exists significantly positive intergenerational persistence of unhealthy consumption behaviors in China, and this persistence seems to be higher from the mother than from the father. After introducing two institutional changes as instruments to address the endogeneity problem of education in unhealthy consumption equations, we find that education has a significantly negative impact on smoking and binge drinking according to the results from instrumental variable estimation. Specifically, an additional year of education decreases the probability of smoking and binge drinking by 4.1% and 3.4%, respectively. Although the health effect of drinking is ambiguous, we also find that the likelihood of drinking decreases by 1.6% with one additional schooling year. Interestingly, an additional year of education could counteract intergenerational persistence of smoking and binge drinking from the father, but it has no impact on intergenerational persistence from the mother. Our results suggest that education might be an efficient way to control unhealthy consumption behaviors in China, but it might not be an efficient way to prevent intergenerational persistence of unhealthy consumption behavior from the mother.     

国际人口迁移、信贷约束与人力资本积累

本文以收入不平等与经济增长的关系为基础,在信贷市场不完全的条件下,进一步考察了熟练劳动力跨国迁移对发展中国家人力资本积累及经济增长的影响。分析显示,基于跨国移民的"教育激励"效应对发展中国家的人力资本积累及经济增长的影响在短期和长期存在差异。短期中,基于跨国移民的"教育激励"效应会减缓"人才流失"效应对发展中国家人力资本积累及经济增长的负面影响,甚至可能会提高发展中国家熟练劳动力的比重,从而促进人均收入水平的提高。长期中,当代际转移收敛于稳态水平时,国际人口迁移不再具有"教育激励"效应,而国际人口迁移的"人才流失"效应则会继续损害人力资本积累,从而对发展中国家的人均收入产生负面影响。     

The effect of education expansion on intergenerational transmission of education: Evidence from China

More than 70 million people have attained a tertiary education due to China's higher education expansion (CHEE). Using data from the Chinese Household Income Project Survey, we examine how dose education expansion have an effect on the intergenerational transmission of education (ITE) by using the exogenous surge brought by CHEE. Our finding is that, after carefully addressing the interference induced by the Compulsory Education Laws and the selection bias caused by intergenerational co-residence, CHEE reduces ITE when educational achievement is measured by schooling years. However, when taking the quality of higher education into account, we find that CHEE does not have a significant effect on ITE, which suggests that the intergenerational inequality in higher education remains. Moreover, we identify the mechanism that the inequality in the quality of high school education extends to tertiary education to explains our findings. To account for the mixed findings in previous literatures, we further propose a general framework for understanding the effect of education expansion on ITE.     

国际贸易与中国农村人力资源开发

过去20～30年间,中国沿着"东亚奇迹"的轨迹再次成为全球经济的重要角色。中国经济融入世界经济同时人力资本迅速积累,国际贸易通过提高收入以及促进城市化过程带给农村人口更好的接受教育机会。然而,教育财政投入偏低以及投入结构上的不合理使得农村人口接受教育的成本相对其收入仍然偏高;教育投入在地方和中央政府之间的分担现状又加剧了地区间农村人口教育的不平衡;户口制度以及各省份间教育考试制度的割裂增加了城市务工人员子女接受高质量教育的成本。简单的政策建议包括两个方面:第一,从政策方面完善教育经费和收入来源结构,加大中央财政对于农村尤其是落后地区农村义务教育的支持,保证义务教育在全国范围落实;第二,城市中教育减低乃至减少户籍歧视,同时通过政府补助增加务工人员参加培训教育的机会。     

When left-behind children become adults and parents: The long-term human capital consequences of parental absence in China

This study examines the long-term effects of childhood left-behind experience on human capital outcomes across two generations in China. Using data from the China Family Panel Studies (CFPS), we find evidence that adults with left-behind experience in early life have fewer schooling years, lower cognitive test scores, a lower Big Five personality traits index, but a higher internal locus of control. Meanwhile, they are more likely to report underweight, chronic diseases, depression, and lower levels of perceived health and happiness. Our findings of the negative consequences on personality traits and health outcomes are robust to a battery of specification and validity tests. These effects also differ markedly by adults' gender, birth cohort, hukou status, and the characteristics of left-behind experience (i.e., type, timing, and duration). Further, our results also suggest a potential intergenerational transmission mechanism in which human capital loss is induced by one's early-life exposure to parental absence. Specifically, one's childhood left-behind experience is also inversely associated with their offspring's outcomes such as Big Five noncognitive skills, birth weight, and height-for-age z-score. Although adults with left-behind experience are inclined to spend more time with offspring compared with their non-left-behind counterparts, they also tend to have significantly poorer household socioeconomic outcomes and less offspring educational investment.     

职业初期的“拼爹”严重吗?——基于代际收入传递的视角

文章聚焦于子代职业早期，建立理论模型和连续变量处理效应模型研究父代收入对子代收入的因果性影响，研究发现：第一，理论上讲，代际收入弹性与人力资本回报率、社会资本回报率正相关，与政府对人力资本投资的累进性负相关；第二，在子代职业早期阶段，父亲收入对子代收入有正向因果性影响，且代际收入弹性整体偏低，说明代际收入流动性相对较大；第三，局部代际收入弹性和子代收入波动随着父亲收入水平的上升而下降，说明低收入父亲的子女的代际收入流动性相对较低，易发生贫困的代际传递；第四，代际收入传递存在一定的城乡和性别差异。以上结论说明在我国职业早期代际收入流动性较高，因此，政府在实施相关提升代际收入流动性的政策时，可侧重于劳动者职业生涯的中、后期，同时，应继续提高公共教育政策的累进性。     

The effects of China's higher education expansion on urban and rural intergenerational mobility

This study examines the heterogeneous effect of higher education on intergenerational mobility of rural and urban residents before and after China's higher education expansion (CHEE). Drawing on data from seven waves of the China General Social Survey (CGSS), we find that, although the overall effect of higher education decreases on alleviating intergenerational persistence after CHEE, undergraduate or postgraduate education can still significantly promote rural intergenerational mobility in terms of occupational-socioeconomic status. However, higher education appears to have changed from assisting social mobility to advancing intergenerational persistence in urban areas after CHEE. The propensity score matching method was used to mitigate sample selection bias, and all the findings were validated by several robustness checks, including placebo and Oster's (2019) omitted-variable tests.     

Human capital estimates in China: New panel data 1985–2010

We introduce new provincial level panel data on human capital in China from 1985 to 2010. Our estimation of human capital is based on the Jorgenson–Fraumeni lifetime income approach modified to fit the Chinese data, thereby allowing a more comprehensive measurement of human capital than traditional partial measurements, such as education. Our provincial data are adjusted for purchasing power parity via a living-cost index as well as for real values so that all values are comparable across the provinces and time. We discuss various characteristics of the data, including total human capital, per capita human capital, and labor force human capital, which in turn are disaggregated based on gender and urban or rural location. Our human capital estimates are compared with the provincial physical capital estimates and provincial GDP. As an illustration, we also use the data to estimate a production function and to decompose China's economic growth from physical capital, human capital, and TFP. Our results, compared with those that use traditional specifications, reassure us as to the reliability of our new China human capital data.     

Human Capital and Hours Worked of Children in Cambodia: Empirical Evidence for Policy Implications*

This study uses data from the Cambodian Child Labor Survey 2001/02 (CCLS‐2001/02) to investigate the trade‐off between child labor and their human capital formation. It also investigates the determinants of child schooling and that of the income earned from child labor. This study finds that children's education is a significant determinant of their wage rate, which implicitly explains the logic behind the household's decision to allow a child to both work and study, and thus explains why parents keep investing in their children's education. We also find that non‐poor households and fathers’ and mothers’ education have statistically significant effects on child schooling. Finally, this study has found that if children's average working hours are below the threshold level of 22 h per week, then education is not affected. These research findings have policy implications for the human capital development of children, as well as for broader social policy in Cambodia.     

Women's education and fertility in China

Using data from the China Family Panel Studies, this paper exploits the Compulsory Education Law of China implemented in the 1980s to empirically examine the causal impact of women's education on fertility in rural China by difference-in-differences methods. The results show that an additional year of schooling lowered the number of children a woman would have by approximately 0.09 children, postponed the age of first childbirth by 0.7 years, and reduced the probability of having a second child or more children by 0.18 among those mothers whose first child was a girl. In addition to the income effect, these results are also partly explained by more educated women preferring quality to quantity of children, placing a greater value on leisure and no longer perceiving children as the sole focus in their lives.     

Does Education Still Pay Off in Rural China： Revisit the Impact of Education on Off-farm Employment and Wages

The present study considers how education affects off-farm job participation and wages. We use a nationally representative dataset from a survey conducted in 5 provinces, 101 villages and 808 households by the authors in early 2005. The empirical results show that educational attainment, skill training and years of experience of rural residents have positive, statistically significant effects on off-farm employment. The average return to a year of education is 7percent, which is higher than those observed in previous studies. We also find the return to an additional year of schooling to be higher for post-junior high schooling than for junior high and below schooling： 11.8 versus 3.2 percent. We conclude that not only does education still pays off in rural China, but also the rate of return to education is increasing over time.     

Who is Better Off from Trade Liberalization? An Experience from Urban China*

Empirical studies have found that the skill wage gap (difference between wages earned by skilled and unskilled workers) narrowed in the case of the ‘Four Asian Dragons’ as they underwent trade liberalization during the 1960s and 1970s, whereas the gap widened in most of the Latin American countries after they liberalized their economies in the 1980s. China's integration into the world economy since 1978 has been used to explain this phenomenon, but few formal studies have been carried out in China regarding the effects of trade liberalization on the skill wage gap because of the limited availability of data. The present study uses unique household surveys conducted in ten provinces of China in 1988 and 1995 to study this issue. Results show that trade liberalization that occurred in China between 1988 and 1995 was responsible for an average increase of 28.73 yuan (approximately 20 percent of the total increase) in average monthly wages. However, trade liberalization significantly widened the urban skill wage gap in China by introducing an increase in income only for those who had 13 years or more of education (at least junior high school graduates). Interestingly, import liberalization also only benefited those who had more than 9 years of schooling; whereas export liberalization brought wage increases for people with 7–12 years of education. Finally, those with specific production skills from technical schools, rather than those with several years of general education, were mostly favored in the labor market in China between 1988 and 1995.     

THE ROLE OF HUMAN CAPITAL IN CHINA'S TOTAL FACTOR PRODUCTIVITY GROWTH: A CROSS‐PROVINCE ANALYSIS

This paper studies the role of human capital in China's provincial total factor productivity (TFP) growth over 1985–2004. The stochastic frontier approach is employed to measure the productivity growth of Chinese provinces. Human capital is measured both qualitatively and quantitatively. In particular, enrolment rates at various levels of schooling are used to represent human capital composition. After controlling for endogeneity, we find that human capital has significant and positive effects on the TFP growth of Chinese provinces. However, when education quality is incorporated, productivity growth appears to be significantly enhanced by quality improvements in primary education only. Regional impacts of human capital are found to differ at various levels of schooling. In the eastern region of China, productivity growth is significantly associated with secondary education. TFP growth in the central region is mainly promoted by primary and university education. Yet in the western region, primary education plays the most prominent role.     

Impacts of education policies on intergenerational education mobility in China

This paper used the CHIP 2013 dataset to investigate the effects of two important education policies in China on intergenerational education mobility, including the Compulsory Education Law implemented in 1986 and college expansion policy (CEP) started from 1999. In general, our results reflect a relatively optimistic picture in urban China, but a less favorable pattern in rural areas. For the urban sample, both the Compulsory Education Law (CEL) and college expansion policy increase the probability of upward mobility at lower parental education level, and the college expansion policy further increases the intergenerational education mobility in urban China. In contrast, each of the two policies indeed reduces the intergenerational education mobility for the rural sample, and the effects found on upward mobility in urban China are non-existent for the rural sample. The unfavorable results in rural China can be attributed to poor enforcement of the policy or the lack of demand-side education reforms.     

Geography and educational inequality in China

Since the 1980s, educational reforms in China have decentralized administration and finance and privatized costs. These changes have emerged in the context of rapid economic growth and rising regional economic disparities. The reforms have mobilized new resources in support of education, but they have also exacerbated regional disparities in funding for schools. Analyses of trends in school finance and expenditures have emerged, but detailed studies of the shifting ties between geography and educational outcomes in the population have not.Using 2000 census data on year and location of birth and educational attainment, we begin to address this gap. We compare the links between birth province and educational outcomes across 5-year birth cohorts to illuminate trends in region-based inequalities. Results show that the percent of variation in years of schooling explained by birth province declined for cohorts born through the early 1960s, and then increased thereafter.Additional analyses use a dissimilarity index to characterize the strength of the link between geography and access to each level of schooling. This index indicates that the link between geography and access to primary school has greatly increased across cohorts, as the few without access to primary school are ever more concentrated in poor areas. The link between birth province and access to subsequent levels of schooling shows mixed trends through cohorts born in the early 1960s: stability for junior high school and a weakening trend for senior high school and college. Thereafter, the dissimilarity index increased, substantially for junior high school and slightly for senior high school and college.Results attest to the enduring significance of geography as an educational stratifier in China. More broadly, results suggest the importance of regional inequalities in conditioning the relationship between development and educational stratification.     

The fading productivity of schooling in East Asia

We estimate changes in the productivity of schooling for six East Asian countries. Our productivity measure is based on changes in the relative price of schooling. A rising price of schooling relative to other labor-intensive service sectors should indicate declining relative schooling productivity. We find that the price of schooling increased by more than the price of other labor-intensive services in 1980 to 1994. We also find that the cognitive achievement of pupils did not change substantially, which suggests a constant quality of schooling output. Hence, we conclude that schooling productivity has declined. The main reason for the fading productivity of schooling in East Asian countries appears to be a strong decline in the pupil-teacher ratio.     

Can school centralization foster human capital accumulation? A quasi-experiment from early twentieth-century Italy

This article shows that a shift towards a more centralized school system can benefit countries that are characterized by poor levels of human capital and large regional disparities in education. In 1911, Italy moved from a fully decentralized primary school system towards centralization through the Daneo-Credaro Reform. The design of the Reform allows us to compare treated municipalities with those that retained school autonomy. Our quasi-experiment, based on propensity score matching (PSM), shows that centralization substantially increased the pace of human capital accumulation. Treated municipalities were characterized by a 0.43 percentage-point premium on the average annual growth of literacy between 1911 and 1921. We discuss some of the channels through which the new legislation affected primary schooling and literacy, with important implications for long-term economic growth.