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Poverty Dynamics of Households in Rural China: Identifying Multiple Pathways for Poverty Transition

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  • Katsushi S. Imai

    (Economics, School of Social Sciences, University of Manchester (UK) and RIEB, Kobe University (Japan))

  • Jing You

    (School of Agricultural Economics and Rural Development, Renmin University of China, China)

Abstract

The objective of our study is to identify pattern and causes of households' transitions in and out of poverty using the long household panel data on rural China in the period 1989-2009. We propose a discrete-time multi-spell duration model that not only corrects for correlated unobserved heterogeneity across transitions and various destinations within the transition, but also addresses the endogeneity due to dynamic selection associated with household's livelihood strategies. Duration dependence is generally found to be negative for both poverty exit and re-entry. The household who chose either farming or out-migration as a main livelihood strategy was more likely to escape from this persistent poverty than those who took local non-agricultural employment, while the role of social protection, such as health insurance, was not universally good for alleviating chronic poverty. Overall, the present study emphasises the central role of agriculture in helping the chronically poor escape from poverty.

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File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2011-35.pdf
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Bibliographic Info

Paper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number DP2011-35.

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Length: 56 pages
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:kob:dpaper:dp2011-35

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Keywords: Poverty transition; Discrete-time duration model; Correlated unobserved heterogeneity; Dynamic selection; Rural China;

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