Status and path of intergenerational transmission of poverty in rural China: A human capital investment perspective

Abstract

This paper focused on the intergenerational transmission of poverty in rural China by estimating the intergenerational transmission of earnings and stated its mechanism from the perspective of human capital investment before children participated in the labor market. The data used in this study were longitude data collected in 2 000 households of 100 villages among 25 counties across five provinces in 2005, 2008, 2012, 2016, and 2019. Qualitative and quantitative methods were adopted. We found a significant intergenerational transmission of earnings in rural China, especially for the pairs of father–children and parents–children. The intergenerational earnings’ elasticities were much less than those in urban areas, which indicated better social mobility in rural areas than that in urban China. The children with parents who could earn much were more likely to be invested before they participated in the labor market, gain a high education and have more skills. Three cases further showed that the mechanism of human capital investment in children breaking the intergenerational transmission of poverty and promoting social mobility.

Keywords

• poverty
• intergenerational transmission
• human capital
• rural China