Association for Public Policy Analysis & Management

This paper examines the intergenerational mobility, inequality of opportunity and the role of education in the intergenerational transmission of economic status in Hong Kong, which has experienced rapid economic growth, rising income inequality and education expansion in the past decades. Samples from population census in 2011 has been used to match adults with their parents. The estimated intergenerational earning elasticity, which is around 0.4, implies a relatively low level of mobility across generations compared with other developed countries in Asia such as Singapore, Korea and Japan. Intergenerational earning mobility is higher for children of high-earning fathers than children of low-earning father, probably because of the credit constraint confronted by the poor family. The earning persistence is higher for high-earning children than low-earning children, which means high-earning children come almost exclusively from rich families. The little chance for high-ability children from poor families to climb the social ladder implies the lack of equal opportunity in the society. Education accounts for half of the intergenerational transmission of the economic status and it appears to be more valuable for sons ending up at bottom of the earning distribution than those at medium and top of the distribution. For one hand, it means education raising the bottom of the earning distribution more than top. One the other hand, it suggests there are other factors other than education that explain the high intergenerational persistence of the high-earning children.