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Why Does the Poor Become Poorer? An Empirical Study on Income Growth, Inequality and Poverty Reduction in Rural China

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  • Yu, Lerong
  • Li, Xiaoyun

Abstract

Based on the provincial data on annual per capita net income, inequality and poverty incidence since 2000, this paper attempts to analyze the impacts of the income growth and distribution on poverty reduction in rural China and further explores changes and causes of rural income inequality by means of econometric model and Gini coefficient decomposition. The results show that the income growth of China’s peasants still plays a significant role in reducing rural poverty, but the deterioration of income inequality will partially offset the positive effects of income growth on poverty reduction; the extent of income inequality in rural areas is obviously higher than that in urban areas; income from wage and salary is one of the most important determinants which causes rural income inequality, followed by the income from household operations, but the ratio of contribution of the income from property and transfer to inequality is relatively low.

Suggested Citation

  • Yu, Lerong & Li, Xiaoyun, 2015. "Why Does the Poor Become Poorer? An Empirical Study on Income Growth, Inequality and Poverty Reduction in Rural China," 2015 Conference, August 9-14, 2015, Milan, Italy 212041, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae15:212041
    DOI: 10.22004/ag.econ.212041
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    References listed on IDEAS

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    1. Ravallion, Martin & Chen, Shaohua, 1997. "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?," The World Bank Economic Review, World Bank, vol. 11(2), pages 357-382, May.
    2. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
    3. Kalwij, Adriaan & Verschoor, Arjan, 2007. "Not by growth alone: The role of the distribution of income in regional diversity in poverty reduction," European Economic Review, Elsevier, vol. 51(4), pages 805-829, May.
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    Consumer/Household Economics; International Development;

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