nep-cna New Economics Papers
on China
Issue of 2010‒03‒28
two papers chosen by
Zheng Fang
Ohio State University

  1. Intergenerational Income Mobility in Urban China By Gong, Cathy Honge; Leigh, Andrew; Meng, Xin
  2. Public Expenditures on Social Programs and Household Consumption in China By David Coady; Giovanni Callegari; Jaejoon Woo; Pietro Tommasino; Emanuele Baldacci; Manmohan S. Kumar

  1. By: Gong, Cathy Honge (University of Canberra); Leigh, Andrew (Australian National University); Meng, Xin (Australian National University)
    Abstract: This paper estimates the intergenerational income elasticity for urban China, paying careful attention to the potential biases induced by income fluctuations and life cycle effects. Our preferred estimates are that the intergenerational income elasticities are 0.74 for father-son, 0.84 for father-daughter, 0.33 for mother-son, and 0.47 for mother-daughter. This suggests that while China has experienced rapid growth of absolute incomes, the relative position of children in the distribution is largely determined by their parents’ incomes. Investigating possible causal channels, we find that parental education, occupation, and Communist Party membership all play important roles in transmitting economic status from parents to children.
    Keywords: intergenerational mobility, transgenerational persistence, political party membership
    JEL: D10 D31
    Date: 2010–03
  2. By: David Coady; Giovanni Callegari; Jaejoon Woo; Pietro Tommasino; Emanuele Baldacci; Manmohan S. Kumar
    Abstract: This paper shows that increasing government social expenditures can make a substantive contribution to increasing household consumption in China. The paper first undertakes an empirical study of the relationship between the savings rate and social expenditures for a panel of OECD countries and provides illustrative estimates of their implications for China. It then applies a generational accounting framework to Chinese household income survey data. This analysis suggests that a sustained 1 percent of GDP increase in public expenditures, distributed equally across education, health, and pensions, would result in a permanent increase the household consumption ratio of 1¼ percentage points of GDP.
    Date: 2010–03–18

This nep-cna issue is ©2010 by Zheng Fang. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.