Scandinavian Working Papers in Economics

Working Papers,
University of Aarhus, Aarhus School of Business, Department of Economics

No 10-14: The Role of Family Background for Earnings in Rural China

Tor Eriksson () and Yingqiang Zhang
Additional contact information
Tor Eriksson: Department of Economics, Aarhus School of Business, Postal: Department of Economics, Frichshuset Hermodsvej 22, 8230 Åbyhøj, Denmark
Yingqiang Zhang: Beijing Jiaotong University, Postal: Beijing Jiaotong University

Abstract: This paper provides estimates of brother income correlations for rural China. Brother correlations are a parsimonious measure of the importance of family and community background as determinants of individuals’ economic status. We find internationally high levels of income similarity for brothers and siblings: 0.57 and 0.58, respectively. We show that compared with the 1990s, income correlations have decreased in more recent years, but remain high. Furthermore, we document virtually no differences between the coastal and interior provinces and by father’s education. The high brother correlations imply that the high level of income inequality in China is likely to persist.

Keywords: Family background; sibling correlation; income inequality

JEL-codes: D31; J62

18 pages, January 1, 2010

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