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The Role of Non-Farm Incomes in Reducing Rural Poverty and Inequality in China

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  • de Janvry, Alain
  • Sadoulet, Elisabeth
  • Zhu, Nong

Abstract

China’s record in reducing rural poverty has been nothing short of spectacular and should be a source of lessons for other countries. Rural poverty reduction is generally sought in the role of agriculture in contributing to farm incomes. However, non-farm employment in rural areas can also be a major contributor. Using detailed household survey data from Hubei province, we simulate the counterfactual of what rural households’ incomes, poverty, and inequality would be in the absence of access to non-farm sources of income. Results show that, without non-farm employment, rural poverty would be much higher and deeper, and that income inequality would be higher as well. We find that education, proximity to town, neighborhood effects, and village effects are crucial in helping particular households gain access to these opportunities. We also find that those who stay as pure farmers have non-observable characteristics that make them much more productive in agriculture, implying positive selection on these characteristics. Moreover, participation in non-farm activities has a positive spillover effect on household farm production.

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Bibliographic Info

Paper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt7ts2z766.

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Date of creation: 01 Mar 2005
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Handle: RePEc:cdl:agrebk:qt7ts2z766

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Keywords: Non-farm income; inequality; poverty; China;

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  1. Jean-Pierre Lachaud, 1999. "Envois de fonds, inégalité et pauvreté au Burkina Faso," Revue Tiers Monde, Programme National Persée, vol. 40(160), pages 793-827.
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Citations

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Cited by:
  1. Winters, Paul & Davis, Benjamin & Carletto, Gero & Covarrubias, Katia & Quiñones, Esteban J. & Zezza, Alberto & Azzarri, Carlo & Stamoulis, Kostas, 2009. "Assets, Activities and Rural Income Generation: Evidence from a Multicountry Analysis," World Development, Elsevier, vol. 37(9), pages 1435-1452, September.
  2. Davis, Benjamin & Winters, Paul & Carletto, Gero & Covarrubias, Katia & Quiñones, Esteban J. & Zezza, Alberto & Stamoulis, Kostas & Azzarri, Carlo & DiGiuseppe, Stefania, 2010. "A Cross-Country Comparison of Rural Income Generating Activities," World Development, Elsevier, vol. 38(1), pages 48-63, January.
  3. Andreas Kontoleon & Pauline Grosjean, 2007. "How Sustainable are Sustainable Development Programs? The Case of the Sloping Land Conversion Program in China," Environmental Economy and Policy Research Working Papers 26.2007, University of Cambridge, Department of Land Economics, revised 2007.
  4. Omilola, Babatunde, 2009. "Rural non-farm income and inequality in Nigeria:," IFPRI discussion papers 899, International Food Policy Research Institute (IFPRI).
  5. Pierre Gasselin & Michel Vaillant & Benjamin Bathfield, 2012. "The activity system. A position paper," Post-Print hal-00742998, HAL.
  6. Benjamin Davis & Paul Winters & Gero Carletto & Katia Covarrubias & Esteban Quinones & Alberto Zezza & Kostas Stamoulis & Genny Bonomi & Stefania DiGiuseppe, 2007. "Rural Income Generating Activities; A Cross Country Comparison," Working Papers 07-16, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
  7. Birthal, Pratap S. & Negi, Digvijay S. & Jha, Awadesh K. & Singh, Dhiraj, 2014. "Income Sources of Farm Households in India: Determinants, Distributional Consequences and Policy Implications," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 27(1).
  8. Hogarth, Nicholas J. & Belcher, Brian & Campbell, Bruce & Stacey, Natasha, 2013. "The Role of Forest-Related Income in Household Economies and Rural Livelihoods in the Border-Region of Southern China," World Development, Elsevier, vol. 43(C), pages 111-123.
  9. Francesca Marchetta, 2008. "Migration and non farm activities as income diversification strategies: the case of Northern Ghana," Working Papers - Economics wp2008_16.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  10. Yi Peng & Liyin Shen & Cong Tan & Dalu Tan & Hao Wang, 2013. "Critical determinant factors (CDFs) for developing concentrated rural settlement in post-disaster reconstruction: a China study," Natural Hazards, International Society for the Prevention and Mitigation of Natural Hazards, vol. 66(2), pages 355-373, March.

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