Some related research of intergenerational mobility concludes that "higher-level intergenerational mobility results in lower-degree inequality", but this does not seem to be consistent with China's reality completely. The possible reasons lie in that traditional intergenerational mobility research does not distinguish between long-run and short-run values effectively, and also does not take the uncertainty of human capital formation into account. In view of these problems, this paper constructs an overlapping generations model and makes a comparative analysis of intergenerational mobility in public education system and market education system. Accordingly, it comes to the conclusions as follows:firstly, long-run inequality in public education system is always lower than one in market education system; secondly, the increase in short-term, intergenerational mobility is not always accompanied by inequality, and when the society is subject to some intensive shocks, the same increase or decrease in these two may occur; thirdly, radical education system reform leads to sharp rise in convergence rate of human capital and the increase in short-term and long-term in equality, and the intergenerational mobility constantly converges to new and lower steady-state value after sudden drop; fourthly, the parameter value of the uncertainty of human capital accumulation reflects unpredicable skills or innate endowments of individuals, and is an important factor affecting interfeneratonal mobility and in equality; the sudden rise in uncertainty leads to the sharp increase in short-run inequality & a new high level of long-term inequality, and rapid rise in short-run intergenerational mobility, but its steady-state value remains constant. These conclusions are beneficial to the clarification of the complex relationship between intergenerational mobility and inequality, and also can provide reference for relevant empirical research.
The Dynamic Effect of Education Financing System on Intergenerational Mobility and Inequality: Analysis Based on Overlapping Generation Model
Journal of Finance and Economics Vol. 42, Issue 08, pp. 4 - 14 (2016) DOI:10.16538/j.cnki.jfe.2016.08.001
Cite this article
Xu Junwu, Huang Shan. The Dynamic Effect of Education Financing System on Intergenerational Mobility and Inequality: Analysis Based on Overlapping Generation Model[J]. Journal of Finance and Economics, 2016, 42(8): 4–14.
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