Social Inequality and Mobility in Hong Kong:

Findings from A Benchmark Survey, 2007

Xiaogang WU(吴晓刚 )

Associate Professor Social Science Division

Hong Kong University of Science & Technology

Nov 6, 2009

1. Background of Research on Inequality Rising inequality has been a pressing issue faced by

many countries in recent decades. It is economic, social, and political issue that deserves research from all major social science disciplines.

Sociological research on inequality considers hierarchical social structures that rank people with respect to access to certain resources, and how such structure/pattern varies in different context.

Research on class inequality and mobility: WHO GETS WHAT, AND WHY?

Occupation is an important basis of social stratification, through which majority of us earn income.

Social Science and The Public Policy Theory-based and empirically-tested models of

inequality that can assist not only in understanding ongoing changes in inequality but also in evaluating public policy and social interventions.

Basis: the collection and empirical analysis of population-based sample data .

The case of Hong Kong: two contrasting images.

Historical Trends 1981-2006: Government Statistics

Change of GDP per Capita & Gini Coefficient from 1981 to 2006 in Hong Kong

0

50000

100000

150000

200000

250000

1 2 3 4 5 6Year

GD

P P

er C

apita

0.4

0.44

0.48

0.52

0.56

Gin

i Coe

ffic

ient

GDP Per Capita Gini Coefficient

Economic Development and Income Inequality in Hong

Kong, 1981-2006

Year GDP Per Capita (at current market price HK $)*

Gini Coefficient

1981 33369 0.451

1986 57784 0.453

1991 120015 0.476

1996 191047 0.518

2001 193500 0.525

2006 215158 0.535

Comparative Income Inequality: the Case of Hong Kong

Slovenia

Spain

Slovak

Canada

Italy

AustraliaUK

Netherlands

Finland

Hong Kong

France

GermanyBelgium

Denmark

Austria

US

SwedenNorway

Switzerland

Japan

Ethiopia

Burundi

MaliNiger

Mozambique

Nepal

Tajikistan

Burkina FasoLesotho

Sierra Leone

Madagascar

Kyrgyz

Cambodia

Uganda

Rwanda

Azerbaijan

Zambia

Bangladesh

LaoVietnam

Kenya

Yemen

Ctrl African

Ghana

IndiaMauritania

Guinea

Armenia

Pakistan

Mongolia

Senegal

Korea

GeorgiaIsrael

Zimbabwe

Uzbekistan

Ukraine

Turkmenistan

Nigeria

Indonesia

Cameroon

Sri Lanka

Nicaragua

China

Cote d'Ivoire

Honduras

Bolivia

P. N. Guinea

Egypt

Philippines

Bulgaria

Morocco

Kazakhstan

Belarus

AlgeriaJordan

Paraguay

Guatemala

Ecuador

Russian

Romania

Thailand

El Salvador

TunisiaTurkey

Lithuania

Peru

Colombia

Dominican

Latvia

Uruguay

Jamaica

Panama

S. Africa

Costa Rica

Estonia

Venezuela

Poland

Mexico

Hungary

Malaysia

Brazil

Croatia

Chile

Czech

Greece

IrelandPortugal

.2.3

.4.5

.6G

ini C

oe

ffic

ien

t

0 10000 20000 30000 40000GDP Per Capita (US$)

2. Hong Kong’s Inequality in Policy Debate Inequality has become a political issue (high Gini

coefficient is often cited as evidence). The government set up a new Commission on

Poverty in 2005 to tackle the problems related to poverty, among which inter-generational transfer of poverty was listed on the top of the Commission’s policy.

Stagnant social mobility and the emergence of M-shape society.

Social Mobility

Some argued that in the context of economic recession and industrial restructuring, Hong Kong is increasingly polarized, fitting the scenario of the M-shaped societies.

Others contended that little statistical evidence suggests such an ongoing trend, namely, ordinary people’s living standards are on the decline and social mobility is blocked.

The Chief Executive’s Policy Address 2009

Temporal Trends in Social Mobility

Intergenerational or intergenerational mobility;

How structural change shapes opportunities;

The role of educational expansion in affecting the pattern of social mobility.

Evidence from the Census and By-census Data, 1981-2006.

Industrial Restructuring

Industry composition change from 1981 to 2006 in Hong Kong

0%

20%

40%

60%

80%

100%

1981 1986 1991 1996 2001 2006Year

Manufacture Construction

Wholesale/retail/trade Transport/communication

Finance/real estate Community/social service

Occupational Change

Occupation Change from 1981 to 2006 in Hong Kong

0%

20%

40%

60%

80%

100%

1981 1986 1991 1996 2001 2006Year

Managers Professional

Associate professional Clerk Service/sales Craft worker

Machine operator/assembler Elementary occupation

Educational Expansion

Overall Education Change in Hong Kong

0%

20%

40%

60%

80%

100%

1981 1986 1991 1996 2001 2006Year

Primary or below Lower secondary Upper secondary

Non-degree Degree or above

3. Social Inequality and Social Mobility: a Benchmark Survey

Public policy research: data as the basis, and methodology as the arbitrator.

Funded by the CPU Public Policy Research Fund (1st). Large sample size (N=4013) Representative: a 2-stage stratified replicated sampling design

for the survey. To make the data representative of the general population, a weight is created based on the official statistics in terms of sex, age, education, and household size from the 2006 Hong Kong by-census data

Comprehensive: covers various topics related to social stratification and mobility, both objective and subjective ones.

Benchmark to monitor changes.

Occupation Occupation: Narrative descriptions of the job for respondent at different

time, the respondent’s father, have been coded to 3-digit ISCO88 occupation categories. 9 categories collapsed into 6 in analysis

Census categories Monthly earnings

Mean years of schooling

Manager/professional 1 managers/administrator 2. Professional

27951 15.8

Associate professional 3. Associate Professional 19709 14.2 Clerk 4. Clerks 12240 12.9 Service worker 5. Service Workers and Shop

Sales Workers 11139 11.0

Skilled worker 6. Skilled Agricultural and Fishery Workers 7. Craft and Related workers

11187 9.6

Unskilled worker 8. Plant and Machine Operators and Assembler 9. Elementary Occupation

7765 8.5

Inter-generational and Intra-generational Mobility Father’s Occupation

Intergenerational I II III IV V VI Total I. Manager/professional

36.54 14.18 21.17 13.63 14.39 15.34 18.64

II. Associate professional

14.78 24.15 13.41 10.20 13.40 8.33 12.70

III. Clerk 25.91 28.49 38.65 33.73 24.32 25.23 26.83 IV. Service worker 12.31 17.54 13.90 24.15 16.46 18.30 16.94 V. Skilled worker 6.04 11.78 5.19 9.72 17.65 19.19 14.14 VI Unskilled worker 4.42 3.86 7.68 8.57 13.78 13.61 10.75 Total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Intra-generational First Occupation I. Manager/professional

89.01 16.96 10.14 8.83 7.11 3.71 19.66

II. Associate professional

4.21 69.26 7.95 7.09 7.39 5.87 12.58

III. Clerk 2.07 7.24 67.13 13.87 4.38 10.45 25.47 IV. Service worker 3.32 4.67 9.96 54.54 11.80 12.32 17.82 V. Skilled worker 0.60 0.76 2.72 8.61 49.02 20.08 14.02 VI Unskilled worker 0.78 1.10 2.10 7.06 20.31 47.57 10.45 Total 100.00 100.00 100.00 100.00 100.00 100.00 100.00

Trends in Occupational Mobility in Hong Kong, by Birth Cohort

Overall 1946-1955 1956-1965 1966-1975 1976-1989 Current Occupation Manager/professional 19.28 17.85 20.56 21.74 16.02 Associate professional 12.56 10.87 12.01 11.89 14.42 Clerk 25.21 10.41 17.46 26.77 36.41 Service worker 17.67 14.19 16.60 17.63 20.02 Skilled worker 14.30 21.12 20.37 12.43 8.00 Unskilled worker 10.99 25.55 13.01 9.53 5.12 Father’s Occupation Manager/professional 17.06 18.59 15.89 14.89 19.77 Associate professional 4.74 2.33 4.42 4.70 5.86 Clerk 5.35 2.73 4.18 6.13 6.48 Service worker 11.49 9.52 10.27 12.35 12.38 Skilled worker 40.13 45.98 42.36 39.82 36.51 Unskilled worker 21.23 20.85 22.88 22.11 19.00 Total mobility rate 0.78 0.72 0.73 0.78 0.83 First Occupation Manager/professional 13.09 13.68 12.22 13.13 13.63 Associate professional 9.11 7.16 7.86 8.95 11.15 Clerk 29.88 15.60 22.34 33.97 37.96 Service worker 19.38 12.43 16.40 20.76 23.30 Skilled worker 19.55 35.09 31.81 15.20 6.90 Unskilled worker 9.00 16.05 9.36 7.99 7.06 Total mobility rate 0.38 0.45 0.42 0.40 0.28

Mobility Rates by Cohort

mobility rate change for intra-generational & inter-generational

0.2

0.3

0.4

0.5

0.6

0.7

0.8

1946-1955 1956-1965 1966-1975 1976-1989

Year

mo

bili

ty r

ate

inter-generational intra-generational

Educational Expansion by Cohort

Overall 1946-1955 1956-1965 1966-1975 1976-1989

Education: Primary 7.80 24.97 13.47 3.53 0.53 Lower secondary 11.76 20.02 16.50 11.70 4.27 Upper secondary 28.72 28.03 27.84 31.93 26.40 Non-degree 20.73 12.60 16.22 23.37 25.24 Degree 30.99 14.38 25.98 29.46 43.56

Implication for occupational structure

0

5

10

15

20

25

30

35

40

1946-1955 1956-1965 1966-1975 1976-1989

Manager/professional Associate professional Clerk

Mobility into Managerial/Professional, Associate Professionals, Clerks

Mobility into Service, Skilled and Unskilled Workers

0

5

10

15

20

25

30

1946-1955 1956-1965 1966-1975 1976-1989

Service worker Skilled worker Unskilled worker

4. Becoming Middle Class

Operational definition: managers/professional, and associate professional (yes=1).

Independent variables: education (secondary or below, tertiary non-degree, and

tertiary degree) Cohort (1946-1955 1956-1965 1966-1975 1976-1989) Sex (male=1) Immigrant (whether born in HK) Living in public housing at age 14 (yes=1).

Logit Models Predicting the Likelihood of Attainment of Middle-Class in Hong Kong

Model 1 Model 2 Education [secondary below omitted] Non-degree tertiary 1.32 ***

(0.14) 1.97 ***

(0.35) Degree or above tertiary 2.84 ***

(0.14) 3.43 ***

(0.49) Male 0.35 **

(0.11) 0.35 **

(0.11) Immigrant -0.24

(0.13) -0.23 (0.14)

Living in Public housing at age 14 -0.23 * (0.12)

-0.24 * (0.12)

Cohort [1946-1955 omitted] 1956-1965 -0.16

(0.17) 0.00

(0.23) 1966-1975 -0.29

(0.18) -0.04 (0.25)

1976-1989 -0.90 *** (0.19)

-0.22 (0.30)

Interaction 1956-1965*non-degree tertiary - -0.59

(0.43) 1956-1965* degree tertiary - -0.82

(0.43) 1966-1975*non-degree tertiary - -1.18 *

(0.47) 1966-1975*degree tertiary - -0.50

(0.55) 1976-1989*non-degree tertiary - -0.56 *

(0.55) 1976-1989*degree tertiary - -1.20 *

(0.56) Constant -1.93 ***

(0.18) -2.13 ***

(0.21)

Findings The importance of education in becoming middle class; Younger cohort (1976-1989) has significantly less chance

of mobility into middle class; Men are more likely than women to become middle class Those from poor family background (living in public

housing at age 14) are less likely to move into middle class, even net of education.

Interaction terms suggest that young cohorts who received tertiary education had less chance to become middle class than their older counterparts.

Summary and Conclusions Economic transformation/restructuring has led to a

decline in job opportunities in manufacturing sector, and skilled and unskilled workers, and the growth in service/sales jobs.

The expansion of tertiary education but limited professional/managerial jobs has led to the inflation of clerk jobs, many of which are filled by tertiary school graduates, who would be almost guaranteed professional and managerial jobs in the past years.

In other words, tertiary graduates are increasingly less likely to make into managerial/professional and associate professional jobs.

Living in public housing at age 14, and immigrant status also affect the chance of becoming middle class.

Summary and Conclusions

Despite the fact said above, there is a very high rate of intergenerational mobility in HK, including both upward and downward mobility;

The rate of intra-generational mobility across occupational class has been very limited in Hong Kong, particularly for the youngest cohort, though it is may be due to the life course effect (it takes some time).

High inequality may coexist with high mobility. While education serves as an important avenue for an

individual’s upward social mobility, it provides little help to address the overall inequality at the society level.

Hong Kong Panel Study of Social Dynamics(HK-PSSD, 2009-2014)

香港社会动态追踪调查

Strategic Public Policy Research

Vision Building an important infra-structure for social

science research in Hong Kong.

Facilitating comparative study of Chinese societies (Taiwan, Hong Kong, and Mainland [or selected regions, Shanghai, Beijing, Guangdong]).

Training next generation of survey/quantitative social scientists in the region of Great China;

Mission To establish the first-ever household panel for data

collection at both household and individual levels in Hong Kong.

To track socioeconomic changes and their impact on people’s life, and provide an empirical basis for public policy formation to address social problems in Hong Kong.

a long-time project: 2-wave surveys within the first-five years (2009-2014); will seek funding beyond 2014.

Public Policy Implication Panel data are particularly useful in identifying

causes of social problems for policy intervention. The first panel data collection of this kind (PSID since 1968 housed at Michigan) was indeed originated from U.S. War on Poverty in 1960s.

HK-PSSD is population-based representative survey, including but not being limited to topics on poverty/inequality and families in Hong Kong.

The panel data will become a comprehensive vehicle for many economic and social research related to public policy in Hong Kong.

Topics for Policy Analysis Income and poverty dynamics; Intergenerational studies; Socioeconomic inequality; Child development; Fertility, marriage and migration; Family and subjective wellbeing; Retirement and aging. And among others.

Thank You!

Center for Applied Social and Economic Research (CASER), Hong Kong Univ of Science & Technology

For Inquiry: 23585875 hk-pssd@ust.hk