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Rural people's perception of income adequacy in China

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  • Bjorn Gustafsson
  • Ximing Yue
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    Abstract

    Purpose – The purpose of this paper is to investigate rural people's perception of income adequacy in order to understand how it is affected by income in the county where the respondent lives, age of household members, as well as number of household members. The paper also aims to find out how poverty lines and poverty counts derived from people's perception relate to what has been previously reported. Design/methodology/approach – The Subjective Poverty Line (SPL) methodology is modified by asking one question on the amount of grains necessary for the respondent's household and another on the amount of cash necessary. Information was obtained from a large survey covering 22 provinces in 2003 and analysed using regressions analysis. Findings – People in high-income counties perceive that more cash, but not grains are needed than those living in low-income counties. Respondents perceive that economies of scale exist in amounts of cash needed for a household. They also perceive that young children need less grain than adults and that a schoolchild incurs higher money expenditures than an adult. A poverty line for rural China derived by the SPL methodology is higher than the low income line used by the National Bureau of Statistics for 2002. However, a poverty count based on the SPL methodology is similar to what has been reported. Practical implications – The findings suggest that poverty lines for rural China preferably should consider not only spatial differences in cost of living but also the number of household members in a non-linear way. Originality/value – The paper describes the first application of the SPL approach to rural China.

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    Bibliographic Info

    Article provided by Emerald Group Publishing in its journal China Agricultural Economic Review.

    Volume (Year): 4 (2012)
    Issue (Month): 3 (October)
    Pages: 264-280

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    Handle: RePEc:eme:caerpp:v:4:y:2012:i:3:p:264-280

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    Web page: http://www.emeraldinsight.com

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    Related research

    Keywords: China; Income; National economy; Poverty; Poverty line; Rural poverty; Rural regions;

    References

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    1. Ravallion, Martin & Chen, Shaohua, 2007. "China's (uneven) progress against poverty," Journal of Development Economics, Elsevier, vol. 82(1), pages 1-42, January.
    2. John A. Bishop & Feijun Luo & Xi Pan, 2006. "Economic Transition And Subjective Poverty In Urban China," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(4), pages 625-641, December.
    3. Sanjay G. Reddy & Camelia Minoiu, 2005. "Chinese Poverty: Assessing the Impact of Alternative Assumptions," Microeconomics 0509002, EconWPA.
    4. Ravallion, Martin & Chen, Shaohua & Sangraula, Prem, 2008. "Dollar a day revisited," Policy Research Working Paper Series 4620, The World Bank.
    5. Loren Brandt & Carsten A. Holz, 2006. "Spatial Price Differences in China: Estimates and Implications," Economic Development and Cultural Change, University of Chicago Press, vol. 55, pages 43-86.
    6. Gustafsson, Bjorn & Li, Shi, 2004. "Expenditures on education and health care and poverty in rural China," China Economic Review, Elsevier, vol. 15(3), pages 292-301.
    7. Ravallion, Martin & Datt, Gaurav & van de Walle, Dominique, 1991. "Quantifying Absolute Poverty in the Developing World," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 37(4), pages 345-61, December.
    8. KNIGHT, John & SONG, Lina & GUNATILAKA, Ramani, 2009. "Subjective well-being and its determinants in rural China," China Economic Review, Elsevier, vol. 20(4), pages 635-649, December.
    9. Thesia I. Garner & Kathleen Short, 2005. "Personal Assessments of Minimum Income and Expenses: What Do They Tell Us about 'Minimum Living' Thresholds and Equivalence Scales?," Working Papers 379, U.S. Bureau of Labor Statistics.
    10. Colasanto , D. & Gaag, J. van der & Kapteyn, A.J., 1984. "Two subjective definitions of poverty: Results from the Wisconsin basic needs study," Open Access publications from Tilburg University urn:nbn:nl:ui:12-364721, Tilburg University.
    11. Xiuqing Wang & Juan Liu & Shujie Yao & Xian Xin, 2009. "China's rural poverty line and the determinants of rural poverty," China Agricultural Economic Review, Emerald Group Publishing, vol. 1(3), pages 283-300, September.
    12. Garner, Thesia I & de Vos, Klaas, 1995. "Income Sufficiency v. Poverty: Results from the United States and the Netherlands," Journal of Population Economics, Springer, vol. 8(2), pages 117-34, May.
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