China’s income gap and intergenerational income flow are of great concern. This paper empirically studies the influence of social networks on intergenerational income flow. Using the correlation of intergenerational income percentile ranks between fathers’ and sons’ income to measure intergenerational income flow, and measuring social networks from three dimensions of scale, intensity and instrumentality, the study finds that social networks significantly promote intergenerational income flow, and the conclusion still holds after using fathers’ family composition as a tool variable to eliminate endogeneity in 1966−1976. This kind of influence is more obvious in the areas with low marketization, woman and low-income families. Further research shows that social networks promote intergenerational income flow by strengthening information sharing, reducing credit constraints and improving children’s employment, and the three dimensions of social networks play different roles in different channels.
How do Social Networks Affect Intergenerational Income Flow?
Journal of Finance and Economics Vol. 46, Issue 08, pp. 80 - 93 (2020) DOI:10.16538/j.cnki.jfe.2020.08.006
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Cite this article
Liu Lin, Zhao Jianmei. How do Social Networks Affect Intergenerational Income Flow?[J]. Journal of Finance and Economics, 2020, 46(8): 80-93.