The Role of Family Background for Earnings in Rural China

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. Compared to 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.