We combine spatial economics and the intergenerational career choice into a multi-sector, multi-occupation and multi-region general equilibrium model. We then calibrate the model using China Household Survey 2005 and inter-regional trade data. We are the first one to calibrate the intergenerational transmission of skill endowment across occupations, which not only hinders the intergenerational occupations flows, but also the intergenerational income mobility through the transmission of occupational income. In counterfactual experiments, we find that trade liberalization reduces the intergenerational mobility across occupations and regions, increase intergenerational income elasticity and the opportunity inequality for young people from different regional and family background. When immigration cost and trade costs decrease at the same time, intergenerational mobility across occupations and regions increase, as well as real income and social welfare. Meanwhile, intergenerational income elasticity and income inequality decline. Trade promotes efficiency and equality at the same time, only when immigration reform increases cross-regional and occupational mobility.

Speaker:

Professor Jie Cai is the Associate Professor at Shanghai University of Finance and Economics, where she teaches in the School of Economics. She is also the reviewer of the Journal of Political Economics, Quarterly Journal of Economics, Review of Economics Dynamics and so on. Professor Cai’s research interests include innovation, technological change and growth, knowledge diffusion, firm dynamics, and international trade. Recently, she has been working on topics concerning knowledge networks and specialization of R&D. She has articles published in the Review of Economics Studies. She received a Ph.D. from University of British Columbia in 2010.