# **(1) Introduction**

Intergenerational persistence in economic status in developing countries has attracted the attention of policymakers and researchers in recent years, partly in response to growing evidence that economic liberalization increased income inequality in many countries, despite a significant reduction in poverty.<sup>2</sup> In the absence of reliable income data over the life-cycle of parents and children, the focus of the recent literature on developing countries has been on intergenerational educational mobility.<sup>3</sup> However, most of the recent studies are devoted to urban households, and intergenerational mobility in rural areas remains particularly under-researched, even though the bulk of the poor live in villages in developing countries. This paper provides a comparative analysis of intergenerational educational mobility in the rural areas of the two most populous countries in the world: China and India, with more than 1.5 billion people living in villages in 2000/2001.<sup>4</sup> While understanding the role of family background in the educational opportunities of 1.5 billion people is an important research agenda in itself, the policy differences between China and India make such a comparative study especially interesting.<sup>5</sup> Perhaps, the most important difference in the 1970s to 1990s, the period during which the children in our empirical analysis went to school, was the restrictions on rural-urban migration in China because of the Hukou registration system. In contrast, there were no policy restrictions on rural-urban migration in India. Returns to education in farm vs. nonfarm occupations are also likely to be different in rural China because of policies such as the household responsibility system, rural industrialization (TVEs), and a lack of a well-functioning labor market in the 1970s to 1990s. Another important aspect in which rural India and rural China differed in this period is their schooling systems, with private schools playing a

> 2For recent contributions on China, see, among others, Fan et al. (2020), Park and Zou (2019), Sato and Li (2007), Emran and Sun (2015a)), on India see, among others, Azam and Bhatt (2015), Emran and Shilpi (2015), Asher et al. (2018), Ahsan et al. (2019), Emran et al. (2020). For cross-country analysis, see Behrman (2000), Hertz et al. (2007), and Neidhofer et al. (2018), among others. Among the few contributions on intergenerational persistence in health, see Bhalotra and Rawlings (2013).

> 3Educational mobility in this paper relates to schooling attainment. For a discussion on the broader concept of education in and outside the classroom as input to human capital production, see, for example, Behrman (2019).

> 4The rural population in India was 742.62 million in 2001 (72.16 percent of the total), according to the census of India 2001. In China, the rural population in 2000 was 807.39 million (64 percent of the total), according to the China Statistical Yearbook, 2011.

> 5China opened up its economy gradually from 1978, and the rural economy went through substantial policy changes starting with the household responsibility system that introduced market incentives at the margin. India liberalized its economy with a big bang in 1991, but the rural economy was relatively less affected as the initial trade protections were focused on the industrial sector as part of a planned industrialization strategy.

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