Inclusive finance development and intergenerational income mobility: evidence from China

Abstract This study examines the impact of inclusive finance development on intergenerational income mobility at the household micro-level using panel data from the China Family Panel Studies (CFPS) between 2016 and 2020. The empirical findings reveal that the development of inclusive finance significantly reduces intergenerational income transmission between offspring and parents, thus enhancing regional income mobility. Mechanism analysis indicates that inclusive finance can improve intergenerational income mobility by facilitating investments in human capital, advancing occupational levels, and enhancing financial literacy. Further heterogeneity analysis shows that the promoting effects of inclusive finance are stronger for females, low-income individuals, those with low social capital, individuals aged 25 and above, and offspring residing in urban areas and regions with higher levels of marketization. This study offers a novel perspective on the research of income mobility among residents and expands the scope of welfare assessment related to inclusive finance. It reveals the relationship between the development of inclusive finance and intergenerational income mobility, which is crucial for a comprehensive understanding of inclusive finance development in China and the prevention of class solidification.