The use of a two dimensional hierarchical elements are investigated for the incompressible flow computation. The construction of hierarchical elements are explained by both a geometric configuration and a determination of degrees of freedom. Also a systematic treatment of essential boundary values has been developed for the degrees of freedom corresponding to higher order terms. The numerical study for the poisson problem shows that the computation with hierarchical higher order elements can increase the convergence rate and accuracy of finite element solutions in more efficient manner than the use of standard first order element. for Stokes and Cavity flow cases, a mixed version of penalty function approach has been introduced in connection with the hierarchical elements. Solutions from hierarchical elements showed better resolutions with consistent trends in both mesh shapes and the order of elements.