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Threshold Effect of Poverty Alleviation Funds on Human Capital Accumulation: A Case Study of Impoverished Counties in China

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  • Zhenshan Yang

    (Key Lab of Regional Sustainable Development and Modelling, Institute of Geographical Sciences and Natural Resources Research, Chinese Academy of Sciences, Beijing 100101, China)

Abstract

Studies have shown that the effectiveness of poverty alleviation funds is not always as intended; hence, there is an urgent need for researchers and policy makers to study the relationship between such funds and their impact on endogenous growth dynamics. This study focuses on the impact of these funds on human capital accumulation, which is an important driver of endogenous economic growth, and analyzes whether there is a threshold level for the efficacy of funds in countering poverty. This study examines the relationship between the Chinese government’s fund transfers to key poverty-stricken counties and the level of human capital in these regions by employing a fixed-effect threshold panel regression model on data from 592 counties from 2002 to 2015. Our study finds that the Chinese government’s fund transfers for poverty alleviation display a significant threshold effect. When funds are less than RMB 1291 per capita, there is a significant effect on local economic development; once this threshold is exceeded, there is a significant inhibitory effect instead. When the amount exceeds RMB 4469 per capita, fund transfers once again stimulate economic growth. This study enriches the theoretical understanding of the complex relationship between the use of funds in poverty-stricken areas and their impact on endogenous growth dynamics. It also provides useful suggestions for the effective use of poverty alleviation funds.

Suggested Citation

  • Zhenshan Yang, 2019. "Threshold Effect of Poverty Alleviation Funds on Human Capital Accumulation: A Case Study of Impoverished Counties in China," Sustainability, MDPI, vol. 11(3), pages 1-12, February.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:3:p:809-:d:203398
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    Cited by:

    1. Jing Liu & Fubin Huang & Zihan Wang & Chuanmin Shuai & Jiaxin Li, 2020. "Understanding the Role of Rural Poor’s Endogenous Impetus in Poverty Reduction: Evidence from China," Sustainability, MDPI, vol. 12(6), pages 1-16, March.
    2. Lei Zhou & Feng Zhen & Yiqing Wang & Liyang Xiong, 2019. "Modeling the Spatial Formation Mechanism of Poverty-Stricken Counties in China by Using Geographical Detector," Sustainability, MDPI, vol. 11(17), pages 1-20, August.
    3. Junying Lin & Zhonggen Zhang & Lingli Lv, 2019. "The Impact of Program Participation on Rural Household Income: Evidence from China’s Whole Village Poverty Alleviation Program," Sustainability, MDPI, vol. 11(6), pages 1-15, March.

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