Public Goods Provision and Upward Intergenerational Occupational Mobility: Empirical Evidence from China

Public goods provision influences a vast majority of the population in China. It directly affects the quality of life in general and has a strong effect on future socio-economic outcomes, directly affecting the prosperity of the next generation of Chinese citizens. However, the different rural and urban public welfare institutions challenge the public policy goal of inclusiveness. Levels of access to public goods vary a great deal for residents of urban sub-districts and rural villages and there are prominent differences in public goods provision even among urban sub-districts and rural villages across China. This paper investigates the impact of public goods provision on social mobility, particularly on upward intergenerational occupational mobility between 1989 and 2009 in China. This paper utilizes China Health and Nutrition Survey (CHNS) questionnaire data to calculate the upward intergenerational occupational mobility by categorizing occupation hierarchies in (1) from lower to middle or to advanced class and from the middle to the advanced class occupation, and (2) from a non-public to a public occupation. Regression analysis using 60,836 representative household samples covering 9 provinces demonstrates low intergenerational occupational mobility within the study period. The upward intergenerational occupational mobility is reduced annually and in underdeveloped regions, it is lower than in the prosperous regions. Further, our empirical analysis shows that despite the differences in public goods provision (education, hospital/health services, sanitation, tap water, transit services, etc.) between rural and urban regions and the differences across four regions, public goods can facilitate upward intergenerational occupational mobility. However, the difference among sub-districts or among villages matters. Residents with public goods available in their sub-districts or villages experience between 2 and 30% higher upward intergenerational occupational mobility compared to those with limited access to public goods and the difference is starker in rural areas. The findings imply the significance of an equitable distribution mechanism of public goods and its role in achieving a more inclusive society in developing countries in general and China in particular. The local governments should focus more on enlarging the coverage of public-goods beneficiaries at the micro (i.e., household/neighborhood) level than on smoothing the regional gap or rural–urban gap in terms of the total amount of public goods provision at the macro level.