Abstract: The welfare effects of income flows are related to the question of whether this kind of flow is “good” or “bad”. Based on CHNS follow-up survey data, this paper measures and decomposes the income mobility in recent years and its effects on social welfare. The results indicate that: (1) the income mobility in 2000-2009 is lower than that in 1991-2000, but the social welfare effects of the former is higher than the latter, because the former has a higher income flow quality; (2) the permanent income trend has the greatest degree of contribution to the income mobility and social welfare levels, indicating that the residents’ ability to increase their income should be enhanced so as to prevent class solidification. Therefore, in the context of larger income distribution gap, the improvement of the ability of the lower-income groups to increase their income can help to promote the income flow, form more reasonable income structure, and let income flows play a role in social welfare effects.

Key words: income mobility; social welfare; income structure