A St’udy On Chinas Rural Poverty In The Perspective Of Growth And Inequality

The itiesis systematically studied rural poverty issues in China in the perspectiveof the growth and inequality. It’s divided into three parts: macroscopic description,empirical measurements and policy research. It proceeded by logic steps with carefulconsideration on types of rural households. With regards to methodology, this thesisadopted Nonparametric Kernel Density Estimaiton method, Pro-poor judgmentmethod, Shapley Decomposition method and Elasticity calculation. The mainfindings are rural income growth helps reduce poverty while the widening incomegap will restrain poverty reduction; the poverty reduction rate slows down recently,owing to the decreasing poverty reduction effect of "Growth" factor and the oppositeeffect of "Inequality" factor.In the macroscopic descirption part’, its found that China’s poverty issue iscomplicated with following characteirstics. Relative poverty and absolute povertycoexist, widely and concentrated distirbution of poverty population coexists, andthere are signiifcant differences on poverty status among different types of householdetc. Using Non-parametric Kernel Density method, this paper presented graphs onabsolute and relative income distirbution of the lowest income of rural households,and made a detailed analysis on rural poverty in China since the80’s of the lastcentury to obtain an objective and accurate understanding of the development andtrend of rural poverty. It’s been revealed that while the absolute poverty has beenrelieved gradually (but the poorest populaiton seems to be irsing), relative poverty isgetting worse; the characteristic of the relief of absolute poverty mainly attirbutes tothe measurement standard, that is，the poverty line stays unchanged or at least at aslowdown speed; it’s just because of the decline of the relative poverty line that keeps*poverty incidence going down step by step.In the empirical measurement part, ifrst，pro-poor measurement for the economicgrowth in rural China was implemented. The results show that, although the overallincome of rural residents takes on a growing trend, only the period of1995-2002witnessed a strict pro-poor growth feature while other years only see an effect on the overall reduction of poverty level. When we look into the types of rural households,the "Growth" has a strongest pro-poor feature on those working on non-farmingactivities, while weakest on those working on farming; it beneifts the poor better ifthe farmers have a higher education level, and less on those with lower educationlevel, especially those illiteracies; it’s more conducive to the east to increase incomebut the effects of pro-poor growth in the west region is not obvious; it is more helpfulfor the poor in the mountainous and hilly areas to get out of poverty, but not as sameas conducive to reducing poverty in the plain area.Second, we calculated the contirbution to poverty reduction of the "Growth" and"Inequality" based on the Shapley Decomposition method. It turned out thateconomic growth has played a positive effect in poverty reduction while theenlargement of income gap drags down the effect. By peirods, it’s shown China’srural poverty reduction has slowed down in the late90’s last century. By types offarmers,"Growth" beneifts more to those who are migrant workers and moreeducated farmers, less to those involved in farming activities and even illiteracyfarmers."Growth" is the main force for the mountains and plains farmers to reducewithin-group poverty, while the "Inequality" factor plays a large negative role inpovetry reduction for farmers in hilly area. In the eastern region, the two factors exertmore or less an equal effect on the within-group poverty reduction. Poverty reductionin the central region mainly depends on growth effect, and for farmers in the West,who hold weak capacities to earn growing incomes, the effects of "Inequality" factorbecome larger than that of "Growth" in some years, which leads to the irse of thewithin-group poverty level.Third, the Elasticity calculation result shows that,(1) at the beginning of reformand opening up, a modest income differentiation helps poverty alleviation, while inrecent years,"Growth" and "Inequality" are both playing enhancing roles on povertywith a larger effect rfom the "Inequality" factor;(2) calculation results by householdstypes show, the poverty level of those who are farming households, low educated, inless-developed West areas, and in mountainous area, is always most sensitive to thechange of "Growth" and "Inequality", while migrant households, high educatedfarmers, farmers in eastern developed areas and in plain areas are less affected;(3) the moderate improvement of the extreme level among the groups will not result inpoverty deteiroration; although the policy rarely highlights the differentiationphenomenon among the groups, shirnking the extreme extent among these groupsplays an important role in poverty reduction;(4) the elasticity of the "Growth" issigniifcantly higher than that of "Inequality", thus emphasis on controlling thewithin-group "Inequality" is also pressing.In the Policy research part, it made policy simulation analysis to see how thegovernment subsidies and price adjustment affect poverty situations of all groups.The result shows, ifx-level subsidies will signiifcantly reduce the poverty level of thepoor in the lower percentile, and the incre^e of family operation fees，productiveifxed assets, food prices and the residence fees are not conductive on povertyreduciton. Corresponding solutions are，(1) strengthening the support system for thepoor in lowest percentile to eliminate absolute poverty;(2) setting "relative povertyline" to ease relative poverty;(3) building multi-index evaluation and enhance thecapacities of the poor;(4) construcitng a poverty support system with a combinationof poverty alleviation through development, social assistance and social protection;(5)improving the fix-level subsidies to certain groups, speciifcally the poor in lowpercentiles;(6) keeping the price of relevant product under control.The innovative points of this study can be summairzed as follows. First itrevisited an old issue rfom a new sight view，uncovered the relative poverty a moreessential problem. Along with economic development, part of the poor population inChina who’s income growth lagged signiifcantly behind the average. So，besides theabsolute poverty problem, the relative poverty is now the main problem the ruralChina facing by. Second, by calculating pro-poor growth rate and drawing the judgingcurve，we investigate the quality of the economic growth, and ifnd that not all thepeirods of growth are strictly pro-poor. The model of development in the new century0is more "pro-rich". Third, taking into account the same degree of growth for*eachgroup of farmers have different pro-poor nature, based on the classiifcation of farmers,we ifnd that off-farm employment activity, the high-education, living in the westernregion or the plain areas are more conducive to the farmers out of poverty. However,pure faming, low education, living in the western region or the mountain areas will not significantly reduce the level of poverty in the farmers group.Fourth, adopting thepolicy simulation method proposed by Araar and Duclos (2007)，we found that thefixed subsidy has higher effectiveness of poverty reduction effects for the purefarmers, the low education attainment, and the famers who live in the western regionor mountain areas. Fitfh, we suggest to improve the targeting accuracy of povertygroup, and at the same itme, we suggest to build up a support system including threeparts, which are development-oirented poverty alleviation program, social assistancesystem and social protection system. Last but not least, technically, it employed theUngrouping method to deal with the macro grouped data rfom the NBS，which ishelpful for better accuracy.