Elsevier

World Development

Volume 38, Issue 5, May 2010, Pages 665-678
World Development

Growing out of Poverty: Trends and Patterns of Urban Poverty in China 1988–2002

https://doi.org/10.1016/j.worlddev.2009.11.016Get rights and content

Summary

This paper estimates trends in absolute poverty in urban China using the Chinese Household Income Project surveys. Poverty incidence curves are plotted, showing lower poverty in 2002 than in 1988 irrespective of the poverty line chosen. Incomes of the poorest fell during 1988–95, contributing to a rise in inequality. However, inequality has been fairly constant thereafter. Models of the determination of income and poverty reveal widening differentials by education, sex, and Communist Party membership. Income from government anti-poverty programs has little impact on poverty, which has fallen almost entirely due to overall economic growth rather than redistribution.

Section snippets

INTRODUCTION

There is a widespread debate over the relative role of economic growth and public redistribution in poverty reduction. In the 1970s, an international consensus evolved for “redistribution with growth,” based in part on a perception of very inegalitarian growth in countries such as Brazil (see Fishlow, 1972). However, the 1980s saw the pendulum swing the other way, with a renewed emphasis being put on economic growth as central to poverty reduction. This stance was in no small part due to a

Data and measurement

This paper uses the Chinese Household Income Project (CHIP) surveys conducted by the Economics Institute, CASS, in 1988, 1995, 1999, and 2002 (see books reporting on these surveys by Griffin and Zhao, 1993, Gustafsson, Riskin). The CHIP surveys were initiated because the standard NBS surveys did not use a measure of income that accorded with international definitions. The CHIP surveys for 1988 and 1995 in particular were claimed to “provide a better empirical foundation for the analysis of the

DECOMPOSING CHANGES IN ABSOLUTE POVERTY

Further insight into poverty trends can be given by various decompositions. In this section, we use decompositions to quantify the role of growth in poverty reduction; to explain the paradox of poverty reduction during the emergence of mass unemployment; and to gauge the effectiveness of China’s social security system.

PATTERNS OF POVERTY—MULTIVARIATE ANALYSIS

We have documented the fall in absolute poverty among urban residents in China from 1988 to 2002. Insights into the changing patterns of poverty can be provided by simple multivariate modeling. We use three estimation methods, the first being a simple Ordinary Least Squares model of household income per capita (logged). This is of interest because household income per capita is the key variable underlying whether households are classified as poor or not. The second method uses a probit to model

CONCLUSION

China’s high economic growth is perhaps the most significant economic development in the world over the last two decades. Much of its significance has been in the improvement of rural livelihoods. Nonetheless, it also has important impacts on urban China—areas that accounted for 39% of its population in 2002. There has been a growing unease that this growth has been unequally shared and has led to the rise of a “new urban poverty.” Skeptics concede that economic efficiency and growth may have

Acknowledgments

The authors are grateful the Ford Foundation for funding the data collection and to three referees for useful comments.

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