The impact of past growth on poverty in Chinese provinces

The impact of prior economic growth on current poverty rates within provincial-level China is examined using panel data and semiparametric techniques. Results reveal that prior short-run growth raises poverty levels; prior long-run growth increases poverty in slow-growing provinces, while reducing poverty in faster growing provinces. Additionally, there is an inverted U-shaped relationship between poverty and income; i.e. at lower income levels, the poverty rate increases with income, while the opposite holds at higher income levels. However, higher savings rates or higher income inequality makes this tradeoff less favorable. Interestingly, many traditional poverty explanatory variables lack explanatory power after taking into account the impact of prior growth.