Fintech and absolute intergenerational mobility: Evidence from digital finance development in China

Abstract

Over the past four decades, wealth accumulation has increasingly concentrated among a small elite, particularly in developing countries. The rise of financial technology (fintech), however, offers a powerful tool to overcome these barriers and foster financial inclusion. Using microdata, we demonstrate that fintech significantly improves absolute intergenerational mobility, which represents a 67.76 % increase in the income of poor families. Our analysis reveals that fintech alleviates liquidity constraints and enhances "market luck", lowering entry barriers for economically disadvantaged individuals to pursue entrepreneurship. Furthermore, fintech's inclusive nature leads to varied effects across different households and offspring, reducing gender inequality and supporting upward mobility for low-income families. By expanding access to financial resources, fintech emerges as a crucial driver in addressing class disparities and promoting intergenerational mobility.