Research On The Distributive Effectiveness And The Targeting Efficiency Of The Rural Minimum Living Standard Security System

As an entitlement program, the rural minimum living standard security system (RMLSSS) desirable goal was to construct a comprehensive social relief system for the further covering low-income groups in rural areas. For the sake of providing a thought to solve their poverty and improve rural income distribution, supporting to further develop, revise and improve, as well as better implementation of RMLSSS, this research addressed to evaluate its distributive effectiveness and verify its targeting efficiency in the operation of RMLSSS.Considering the rural low-income groups'poverty and social welfare missing, to interpret the Western economists'theoretical thoughts about social welfare effectiveness and distribution, it could be found: social welfare had effectiveness. Specifically, the country intervened in the field of national redistribution through income transfer system, to change income distribution in different classes and different members of society, or compensating for some members suffered welfare losses in social changes, and thus improving their welfare, and then increasing social average marginal propensity to consume, aggrandizing social welfare as a whole. However, not only abstract connotation and ambiguous extension of social welfare, but also governments were to assume the responsibility to promote social welfare in a large scale.Many governments'departments shared some social welfare'functions, it was too difficult to regard social welfare as an institutional entity. Then, in the research field of"social welfare"and"social policy", what kind of social intervention policy could be used to more accurately express the system for the rural low-income groups? How to assist them better? The research introduced the policy framework of"social protection"(SP). SP was specific to poverty groups, disadvantaged and marginalized groups in a country or a society, it was based on investment in human capital theory, the life-cycle theory, and social risk management theory, its policy objectives was seeking to reduce poverty and promote social justice. Thus, the policy effectiveness of SP could be evaluated from the poverty reduction and social equity. Because of SP assisting the lowest-income groups through income transfers in cash or in kind, in this way, there were likely to go along the quantitative research.MLSSS was not only an indispensable social relief system to protect basic right of life for the lowest-income groups in the vast majority of market economy countries, but also an instrument which the government regulated social distribution, reduced poverty and achieved social equity, so was known as a final"safety net"for them. It was of selectivity, targeted and prosthesis. These features constrained on the supply of assistant resource, expressing the conditions of supply and payment limits. Among them, the selectivity was relative to the universalism, in the selective welfare model, it was needed to confirm and target specific groups, so it was bound to associate with targeting, at the same time, the income transferred to targeting groups needed prosthesis. Their different was: selectivity belonged to design level, while targeted and prosthesis belonged to executive level. With the establishment of Chinese RMLSSS, it had been an important institutional innovation which made a breakthrough in original residual model, gradually to institutional model. Because it was still at the stage of exploration and practice, the design and implementation of program were combined with their actual situations and developing thoughts, so there were formed various patterns at the main fund-raising and security standards in various regions. The research had selected twenty counties (cities, districts) to carry out special investigation in Fujian province. The results showed: RMLSSS of Fujian province had some innovations in operating mechanism, including fund-raising, security standards, benefit eligibility, organizational management and complementary measures, etc. One of the financial models was that the provincial finance had been directly assessed to financial field, set up special funds for RMLSSS; the second was the financing main excluding village level. The research results showed that village-level communities could not afford stable matching funds, with the exception of a small number of developed areas. This was consistent with international social development experience that the communities had advantages in being of services rather than funding.To explore whether RMLSSS can reduce poverty and improve. Based on General Quadratic & Beta models of Lorenz curve, adopted panel data of per capital and income grouping in China Statistical Annals and Fujian Statistical Annals from 1990 to 2006, using the World Bank POVCAL software, measuring poverty and income distribution before transferred income of RMLSSS. As the two benchmarks of Chinese rural absolute poverty and international standard poverty with $1 per person per day measured FGT indices, the results revealed: H, PG and SPG indices presented overall downward trends in the rural areas of China and Fujian province, but changes with the complexity. Specifically, in the phase of development and poverty alleviation from 1990 to 1993, H index in rural China fell on average 48.33% & 94.67%, it also decreased on average 29.0% & 42.67% respectively in rural Fujian province; in the phase of fortified alleviation poverty from 1994 to 2000, H index continued to maintain the downward trend, it decreased on average 53.71% & 87.83% in China's rural areas, it also dropped on average 14.5% & 64.0% in Fujian province, both PG and SPG fell, but volatility of changes were apparent; in the building a well-off stage from 2001 to 2006, H, PG and SPG indices maintained a continuous downward trend, and changed in relatively stable, population of the rural lowest-income demonstrated rigid stability. Meanwhile, under the benchmark of international standard poverty with $1 per person per day, a good result in anti-poverty could be found, no showing too high value of poverty indices. Therefore it would be appropriate to be identified as absolute poverty line in China's rural areas, to avoid too low standard to include some low-income people in government aid objectives.According to the relative low-income benchmark with 40% & 50% of rural per capital income, the results revealed: H index significantly fluctuant increased, both PG and SPG indices remained slow upward trends, quite contrary to the absolute poverty line from 1990 to 2006. The results in China's rural areas indicated that FGT indices had been changed in overall upward trends with relative low-income standard improving and GINI coefficient increasing. This reflected that the population of relative low-income aggrandized, their average welfare loss extended and the gap of income distribution between them expanded.Based on measure of poverty and income distribution of the rural low-income groups, to further explore quantitative relationships and internal relations between economic growth as well as income distribution and poverty indices, the fore-mentioned method was used to construct an analytical framework between them. The results demonstrated: the poverty elasticities with respect to economic growth (εα) were below zero from 1990 to 2006, showing that economic growth lessened population of low-income and alleviated their poverty situation; the poverty elasticities with respect to income distribution (θα) were above zero from 1990 to 2006, showing poverty indices fluctuated upward along with rising GINI coefficient; the interactive effects of poverty elasticity (λα) were all above zero from 1990 to 2006, showing income distribution gap played more important role on poverty. To continue to reduce poverty, it should not only rely on economic growth, adjustment of the income distribution policy were very essential. In turn, the improvement of income distribution could create a better social environment for economic growth, the perfect combination between economic growth and income distribution would be better to reduce absolute and relative poverty.Because of changing of rural poverty character, it was more concerned about rural household livelihoods at the micro level. According to the survey data from 20 counties (cities, districts) of 539 rural families in Fujian province, the research carried out an empirical analysis of impact factors from characteristics of household head, family status and community characteristics through Logistic regression model. The results manifested that those variables had significant impacts on rural household poverty, including family type, family labor force status, family members of health status, whether to participate in professional skills training, whether to participate in non-agricultural activities, whether for village cadres, field per capita, etc. However, most variables of community characteristics were not significant, indicating farmer poverty no having an obvious regional feature, the household livelihoods of the micro-level factors were decisive.To evaluate the distributive effectiveness of RMLSSS, the research regarded Fujian province as an example, based on measured situations of rural poverty and income distribution pre- transfers of RMLSS, used the GQ &βmodels to measure rural poverty and income distribution post- transfers, compared pre-transfers with post-transfers in FGT indices, GINI coefficient and MLD index, to assess the distributive effectiveness of the macro since 2004 in rural areas in Fujian province. Based on theoretical analysis, international literature and practical experience, two research hypotheses were proposed, utilized packet data of per capital and income grouping of rural residents in Fujian Statistical Annals from 2004 to 2007, added the core variance of RMLSS income transfers in the lowest-income group, to validate the two research hypotheses. Measured results showed that: under the absolute poverty line in rural China, FGT indices were zero after RMLSSS in Fujian province from 2004 to 2007. From this point of view, poverty reduce effects achieved 100%. In theory, if the government provided for the minimum living standard above poverty line, poverty indices should be zero, the model calculation results were consistent with the theoretical analysis. This demonstrated that when the government had provided protection standard far beyond the poverty line, it could eliminate the short-term poverty. Simultaneously, the results showed: under the international standard poverty line with $1 per person per day, the effects of reduce poverty were still significant. The reduce effects of H index were 84.12%, 86.12%, 87.89% and 95.32% from 2004 to 2007, at the same time, PG index were 95.00%, 95.49%, 95.34%和95.65% respectively, SPG index were all 100% in the effects of reduce poverty. These demonstrated that RMLSSS could significantly reduce the rural lowest-income population, make up the overall well-being missing on the lowest-income families to a certain extent, and substantially narrow income distribution gaps among them under security benchmark.The results revealed that: RMLSSS had some certain effects on the reduction of relative poverty in rural areas. Under the relative low-income benchmark with 40% of rural per capital income, the effects on poverty reduction of H index were 16.46%, 17.81%, 19.26% and 22.89% from 2004 to 2007, while the effects of PG index were 33.24%, 33.56%, 33.74% and 37.22%, and the effects of SPG index were 47.14%, 47.34%, 47.59% and 49.18% respectively in the poverty reduction; at the same time, under the relative low-income benchmark with 50% of rural per capital income, the effects on poverty reduction of H index were 10.76%, 12.01%, 12.10% and 14.68% from 2004 to 2007, while the effects of PG index were 17.16%, 17.36%, 17.69% and 20.17%, and the effects of the SPG index were 29.67%, 29.96%, 30.59% and 32.57% respectively in the poverty reduction. The conclusion could be drawn: RMLSSS had played a certain role on rural relative poverty reduction at the current economic development and security standard level in Fujian province.The results indicated that: even if it was very limited, RMLSSS had a slight effect on improving rural income distribution. The reducing effect of rural GINI coefficient were 1.54%, 1.31%, 0.96% and 2.30% respectively from 2004 to 2007, with average only 1.53%. This reflected that the limited capital investment was difficult to obviously improve the overall rural income distribution in the circumstances of rural economic development rapidly rising. When the MLD index was introduced to explain the changes gap between the low group's income and average income, it could be found: the mean relative gap was narrowing in a degree between the lowest-income and each income group, and with the convergent trend after the implementation of RMLSSS. The empirical results supported the two research hypotheses.To examine the targeting efficiency of RMLSSS, firstly, based on investigation in Fujian province, the research used survey data to descriptive statistical analysis on cognition and identity; secondly, the research used under-coverage ratio (UR), leakage ratio (LR), vertical expenditure efficiency and spillover ratio, which were draw on the experience of Prof. G. Dellaportas'research method and W. Beckerman model, to inspect targeting accuracy, targeting income gap, payment equity and the actual effects of relief at the implementation of RMLSSS.The descriptive statistical analysis of respondents manifested: on the whole, regardless of the targeting and non-targeting households had quite high cognition and identity. By contrast, the targeting households had a higher degree of cognition and identity, they were more sensitive to main body of beneficial eligibility and be protected object, had the better judgements or the higher expectations on the accurately target problem, had a higher degree of satisfaction with security standard. All those demonstrated that RMLSSS were more attractive to targeting households, and getting a satisfying reaction. The results also revealed that the distributions of the guaranteed allowances were complex, the targeting households demanded for equitably and reasonable distributed ever shrilled.The results revealed that there were mismatch between targeting household and protected households in the implementation of RMLSSS, the deviations were in esse. These included: UR was 8.11%, LR was 4.42%, and the total deviations were 12.53%. According to the investigation results, UR was often higher at a relatively low level of economic development areas, while LR incurred on the contrary. In view of RMLSSS necessary to benefit targeting households, UR should be a greater concern to policymakers and administers. Therefore, the further efforts would be system"fine-tuning"—the core should lie in appropriate increasing security standard and correspondent extending its coverage.The better relief effects had been achieved by obtained benefit. More than 90% of the targeting households had guaranteed their basic needs, there were 12.61% had gotten away from the poverty after payments. Data in the investigation displayed that the increased amount of the per capita consumption expenses had been about 56.37%, which paid for them in 2007. They had high propensity to consume. RMLSSS had a positive effect on driving consumption demand growth.In order to further improve targeting efficiency of RMLSSS. From the perspective of the livelihood assets of the rural households, the research selected a number of representative indicators in five categories assets, to setup quantitative indices system through indicators assignment, standardized treatment and weight distribution, then calculate quantitative value of livelihood assets, which reflected the extend of the poverty in low-income households. According to the total value to rank order that would determine the targeting households of RMLSSS. The application in practice demonstrated that the method could carry out accurate sequencing for the low-income farmers, and be used as an important basis for payments for the targeting households.