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Explaining the Poverty Difference between Inland and Coastal China: A Regression‐based Decomposition Approach

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  • Guanghua Wan
  • Yin Zhang

Abstract

This study proposes a decomposition framework for quantifying contributions of the determinants of poverty to spatial differences or temporal changes in poverty. This framework is then applied to address the issue why poverty incidence is higher in inland than in coastal China. The empirical application requires household or individual income observations which, generally speaking, are not available. Thus, a data‐generation method developed by Shorrocks and Wan is introduced to construct such observations from grouped income data. It is found that inland China is poorer than coastal China, mainly due to lower efficiency in resource utilization rather than less endowment of resources. Also, trade became poverty‐reducing in coastal China in the late 1990s but remained poverty‐inducing in inland China. Policy implications are briefly discussed.

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  • Guanghua Wan & Yin Zhang, 2008. "Explaining the Poverty Difference between Inland and Coastal China: A Regression‐based Decomposition Approach," Review of Development Economics, Wiley Blackwell, vol. 12(2), pages 455-467, May.
    • Handle: RePEc:bla:rdevec:v:12:y:2008:i:2:p:455-467
    DOI: 10.1111/j.1467-9361.2008.00451.x
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    1. Yin Zhang & Guanghua Wan, 2006. "Globalization and the Urban Poor in China," Dundee Discussion Papers in Economics 196, Economic Studies, University of Dundee.
    2. Xavier Sala-i-Martin, 2001. "The disturbing 'rise' of global income inequality," Economics Working Papers 616, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2002.
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    Cited by:

    1. Muqun Li & Ian Coxhead, 2011. "Trade and Inequality with Limited Labor Mobility: Theory and Evidence from China," Review of Development Economics, Wiley Blackwell, vol. 15(1), pages 48-65, February.
    2. Peng Bin, 2016. "Dynamic Development of Regional Disparity in Mainland China: An Experimental Study Based on a Multidimensional Index," Sustainability, MDPI, vol. 8(12), pages 1-28, December.
    3. Somnath Chattopadhyay, 2014. "Analysis Of Poverty And Efficiency: An Earnings Frontier Approach," Bulletin of Economic Research, Wiley Blackwell, vol. 66(2), pages 133-155, April.
    4. Somnath Chattopadhyay & Amita Majumder & Hasanur Jaman, 2014. "Decomposition of inter-regional poverty gap in India: a spatial approach," Empirical Economics, Springer, vol. 46(1), pages 65-99, February.
    5. Peng Bin & Andrea Fracasso, 2017. "Regional Consumption Inequality in China: An Oaxaca-Blinder Decomposition at the Prefectural Level," Growth and Change, Wiley Blackwell, vol. 48(3), pages 459-486, September.
    6. Lie Ma & Qiu Xie & Shiying Shi & Xiaosu Ye & Aifeng Zhao, 2017. "Regional Maldistribution of China’s Hospitals Based on Their Structural System," Sustainability, MDPI, vol. 9(6), pages 1-18, June.

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