Inequality of opportunity in China: Evidence from pseudo panel data

Xinchen Dai and Jing Li

China Economic Review, 2021, vol. 68, issue C

Abstract: We construct a pseudo panel sample from the China General Social Survey to study the inequality of opportunity in China. The pseudo panel enables us to control for cohort-specific heterogeneities when estimating the Mincer equation, and the results show that individual circumstances play a prominent role in determining income advantage. Counterfactual analysis further reveals the importance of cohort-level circumstances: individual circumstances account for less than 10% of the observed income inequality, whereas equalizing both the individual circumstances and the cohort fixed effects reduces income inequality by 30%. Among the individual circumstances we examine, gender and paternal characteristics contribute more to income inequality than does hukou of birth. Subsample analysis shows that China's western provinces exhibit the highest inequality of opportunity and that the inequality of opportunity among younger cohorts is smaller than that among older cohorts.

Keywords: Inequality of opportunity; Circumstances; Effort; Pseudo panel; China (search for similar items in EconPapers)
JEL-codes: J31 O15 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:68:y:2021:i:c:s1043951x21000559

DOI: 10.1016/j.chieco.2021.101637

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