Fintech and absolute intergenerational mobility: Evidence from digital finance development in China

Chenxuan Chen

Structural Change and Economic Dynamics, 2025, vol. 74, issue C, 1020-1032

Abstract: Over the past four decades, wealth accumulation has increasingly concentrated among a small elite, particularly in developing countries. The rise of financial technology (fintech), however, offers a powerful tool to overcome these barriers and foster financial inclusion. Using microdata, we demonstrate that fintech significantly improves absolute intergenerational mobility, which represents a 67.76 % increase in the income of poor families. Our analysis reveals that fintech alleviates liquidity constraints and enhances "market luck", lowering entry barriers for economically disadvantaged individuals to pursue entrepreneurship. Furthermore, fintech's inclusive nature leads to varied effects across different households and offspring, reducing gender inequality and supporting upward mobility for low-income families. By expanding access to financial resources, fintech emerges as a crucial driver in addressing class disparities and promoting intergenerational mobility.

Keywords: Fintech; Digital finance; Absolute intergenerational mobility; Market luck (search for similar items in EconPapers)
JEL-codes: L26 O12 O16 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:74:y:2025:i:c:p:1020-1032

DOI: 10.1016/j.strueco.2025.07.004

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