TITLE:
The Effect of Trade Liberalization on Intergenerational Income Mobility
AUTHORS:
Guo’e Xie, Xinmiao Zhang
KEYWORDS:
Trade Liberalization, Income Inequality, Intergenerational Income Mobility
JOURNAL NAME:
Open Journal of Business and Management,
Vol.10 No.4,
July
25,
2022
ABSTRACT: The
recent backlash against globalization, including the Sino-US trade war and
Brexit, has highlighted the discussion on the effect of trade on economic
inequality. This paper employs a probit model to investigate the effect of
trade liberalization on intergenerational income mobility based on micro-level
data from China Health and Nutrition Survey and macro-level data from Regional
Statistic Yearbooks in 1989-2015. Most notably, we study how industrialization
and upward education mobility explain the underlying mechanisms of such effect.
The results indicate that a high level of trade openness may promote upward
income mobility for both sons and daughters and restrain downward income
mobility for daughters. Therefore, China should keep up its process of reform
and opening up, further eliminating trade barriers and strengthening
international cooperation to provide equal opportunities of high-skilled
occupations for individuals from different family backgrounds. Chinese families
should be encouraged to provide equal educational opportunities for boys and
girls.