Can digital financial inclusion facilitate intergenerational income mobility? Evidence from China

Xiaolan Yang, Lele Zhang, Xiaoyue Hong and Wenchao Li

Journal of Comparative Economics, 2024, vol. 52, issue 4, 951-962

Abstract: We present an empirical study on the impact of digital finance development on intergenerational income mobility. Combining nationally representative Chinese household survey data with indices for digital financial inclusion (DFI), we find that the development of digital finance leads to a lower correlation between children's income and their fathers’ income, significantly enhancing intergenerational mobility. Specifically, a one standard deviation increase in the DFI index is associated with a decrease in intergenerational income elasticity by 0.04–0.05. The effect is particularly pronounced in rural and inland regions. Furthermore, we find that digital finance development stimulates household entrepreneurial activities, which in turn enhance the role of digital finance in reducing intergenerational income correlation.

Keywords: Digital Financial Inclusion; Intergenerational income mobility; Economic inequality; Entrepreneurship (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:52:y:2024:i:4:p:951-962

DOI: 10.1016/j.jce.2024.09.001

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