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Three Poverties in Urban China

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  • John Knight
  • Li Shi

Abstract

Radical economic reform and rapid marketization in the late 1990s could be expected to create new poverty and insecurity in Chinese cities. Accordingly, the extent and nature of poverty in urban China is examined by means of a 1999 cross-section household survey. Three types of poverty-"income and consumption", "income not consumption" and "consumption not income"-are distinguished. A large proportion of the poor have income above, but consumption below, the poverty line. The estimated consumption function shows the importance of consumption smoothing, of precautionary considerations, of saving for investment opportunities, and of special needs related to the presence of children or sickness. An exercise is conducted to compare the three types of poverty by decomposing the divergence in the consumption of each poverty group from its benchmark consumption. Unpredicted financial assets and income, and differences in special needs, are important in contrasting and explaining the three poverties. Copyright © 2006 The Authors; Journal compilation © 2006 Blackwell Publishing Ltd.

Suggested Citation

  • John Knight & Li Shi, 2006. "Three Poverties in Urban China," Review of Development Economics, Wiley Blackwell, vol. 10(3), pages 367-387, August.
  • Handle: RePEc:bla:rdevec:v:10:y:2006:i:3:p:367-387
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    References listed on IDEAS

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    1. Chong, Alberto & Lopez-de-Silanes, Florencio, 2002. "Privatization and labor force restructuring around the world," Policy Research Working Paper Series 2884, The World Bank.
    2. Estache, Antonio & Laffont, Jean-Jacques & Zhang, Xinzhu, 2004. "Downsizing with labor sharing and collusion," Journal of Development Economics, Elsevier, pages 519-540.
    3. Mathias Dewatripont, 1992. "Economic Reform and Dynamic Political Constraints," ULB Institutional Repository 2013/175991, ULB -- Universite Libre de Bruxelles.
    4. Alderman, Harold & Canagarajah, Sudharshan & Younger, Stephen, 1995. "A Comparison of Ghanaian Civil Servants' Earnings before and after Retrenchment," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 4(2), pages 259-288, October.
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    Cited by:

    1. Tilman Brück1 & Alexander Danzer & Alexander Muravyev & Natalia Weißhaar, 2007. "Determinants Of Poverty During Transition: Household Survey Evidence From Ukraine," PRUS Working Papers 40, Poverty Research Unit at Sussex, University of Sussex.
    2. Meng, Xin & Gregory, Robert & Wang, Youjuan, 2005. "Poverty, inequality, and growth in urban China, 1986-2000," Journal of Comparative Economics, Elsevier, pages 710-729.
    3. Meng, Xin & Gregory, Robert & Wang, Youjuan, 2005. "Poverty, inequality, and growth in urban China, 1986-2000," Journal of Comparative Economics, Elsevier, pages 710-729.
    4. Gustafsson, Björn Anders & Yue, Ximing, 2006. "Rural People’s Perception of Poverty in China," IZA Discussion Papers 2486, Institute for the Study of Labor (IZA).
    5. Brück, Tilman & Danzer, Alexander M. & Muravyev, Alexander & Weisshaar, Natalia, 2010. "Poverty during transition: Household survey evidence from Ukraine," Journal of Comparative Economics, Elsevier, pages 123-145.
    6. Jin, Hailong & Qian, Hang & Wang, Tong & Choi, E Kwan, 2014. "Income Distribution in Urban China: An Overlooked Data Inconsistency Issue," Staff General Research Papers Archive 37381, Iowa State University, Department of Economics.
    7. Khor, Niny & Pencavel, John, 2008. "Measuring Income Mobility, Income Inequality, and Social Welfare for Households of the People’s Republic of China," ADB Economics Working Paper Series 145, Asian Development Bank.
    8. Gustafsson, Björn Anders & Quheng, Deng, 2007. "Social Assistance Receipt and its Importance for Combating Poverty in Urban China," IZA Discussion Papers 2758, Institute for the Study of Labor (IZA).
    9. Jin, Hailong & Qian, Hang & Wang, Tong & Choi, E. Kwan, 2014. "Income distribution in urban China: An overlooked data inconsistency issue," China Economic Review, Elsevier, vol. 30(C), pages 383-396.
    10. Brück, Tilman & Danzer, Alexander M. & Muravyev, Alexander & Weisshaar, Natalia, 2010. "Poverty during transition: Household survey evidence from Ukraine," Journal of Comparative Economics, Elsevier, pages 123-145.
    11. Björn Gustafsson & Li Shi & Hiroshi Sato, 2004. "Can a subjective poverty line be applied to China? Assessing poverty among urban residents in 1999," Journal of International Development, John Wiley & Sons, Ltd., pages 1089-1107.

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