Trends

Preview of the 14th Xixian Forum on Income Distribution and Public Finance
publish date:2021-09-06 publisher:Sheng Qian

Title of Lecture: Higher Order Income Risk, Income Flows and Inequality

Time: 8th September 2021, 9:30am - 11:00am

Venue: Conference Room 127, Wenqin Building

Moderator: Prof. Lu Yuanping

Guest speaker: Zou Jianwen

PhD in Quantitative Economics, Huazhong University of Science and Technology

Brief Introduction:

  While the economy is growing at a rapid pace, China's declining income mobility and rapidly rising income inequality have become a matter of great concern. Income shocks play an important role in understanding inequality, yet existing studies have assumed that income shocks follow a normal distribution, ignoring the non-normality of income shocks. In literature, income shocks are generally assumed to follow a normal distribution, however, many studies in recent years have shown that income shocks are non-normal, with negative skewness and higher kurtosis, implying that residents are not only exposed to income risk in the sense of second-order variance, but also to higher-order income risk. This paper describes the dynamics of income and the empirical facts of income mobility in China based on CFPS microdata and investigates the impact of structural optimisation of income shocks on income mobility and inequality. Therefore, the government, first to the need to preserve employment, improve the level of industrial protection, reduce labour market frictions and prevent workers from being affected by extreme income shocks such as unemployment, and second, the need to further improve the vocational training system and career advancement system to reduce the risk of workers slipping down the job ladder.