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Digital financial inclusion and the persistence of family background: Evidence from China

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  • Fang, Chenhao
  • Ma, Yecheng

Abstract

Whether digital financial inclusion (DFI) weakens intergenerational income persistence is an important question for assessing whether digital finance promotes equality of opportunity. We examine this question using five waves of the China Family Panel Studies from 2014 to 2022, matched with province-level DFI indices. The estimates indicate that higher DFI weakens the relationship between parental and offspring income, implying greater intergenerational income mobility. This effect is more pronounced in the lower and lower-middle offspring income quantiles and becomes insignificant at the upper end. The mobility-enhancing role of DFI is also stronger among offspring with less-educated parents, with parents employed outside the state-system, and with rural hukou. Mechanism tests point to two channels: DFI eases household liquidity constraints related to offspring education investment and promotes upward intergenerational occupational mobility. Overall, DFI delivers the largest mobility gains where family background and institutional barriers are most binding, indicating that digital finance can weaken the intergenerational transmission of economic advantage when it expands effective access to opportunity-enhancing services.

Suggested Citation

  • Fang, Chenhao & Ma, Yecheng, 2026. "Digital financial inclusion and the persistence of family background: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 93(C), pages 1460-1476.
    • Handle: RePEc:eee:ecanpo:v:93:y:2026:i:c:p:1460-1476
    DOI: 10.1016/j.eap.2026.08.039
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