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Are there lasting impacts of aid to poor areas?

  • Chen, Shaohua
  • Mu, Ren
  • Ravallion, Martin

The paper re-visits the site of a large, World Bank-financed, rural development program in China, 10years after it began and four years after disbursements ended. The program emphasized community participation in multi-sectoral interventions (including farming, animal husbandry, infrastructure and social services). Data were collected on 2000 households in project and non-project areas, spanning 10years. A double-difference estimator of the program's impact (on top of pre-existing governmental programs) reveals sizeable short-term income gains that were mostly saved. Only small and statistically insignificant gains to mean consumption emerged in the longer-term -- though in rough accord with the average gain to permanent income. The use of community-based beneficiary selection greatly reduced the overall impact, given that the educated poor were under-covered. The main results are robust to corrections for various sources of selection bias, including village targeting and interference due to spillover effects generated by the response of local governments to the external aid.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 93 (2009)
Issue (Month): 3-4 (April)
Pages: 512-528

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Handle: RePEc:eee:pubeco:v:93:y:2009:i:3-4:p:512-528
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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  1. Ravallion, Martin & Shaohua Chen, 2004. "China's (uneven) progress against poverty," Policy Research Working Paper Series 3408, The World Bank.
  2. Jalan, Jyotsna & Ravallion, Martin, 1998. "Are there dynamic gains from a poor-area development program?," Journal of Public Economics, Elsevier, vol. 67(1), pages 65-85, January.
  3. Chen, Shaohua & Ravallion, Martin, 1996. "Data in transition: Assessing rural living standards in Southern China," China Economic Review, Elsevier, vol. 7(1), pages 23-56.
  4. Knight, J. & Song, L., 1990. "The Spatial Contribution To Income Inequality In Rural China," Economics Series Working Papers 99106, University of Oxford, Department of Economics.
  5. Jyotsna Jalan & Martin Ravallion, 1999. "China's Lagging Poor Areas," American Economic Review, American Economic Association, vol. 89(2), pages 301-305, May.
  6. Richard K. Crump & V. Joseph Hotz & Guido W. Imbens & Oscar A. Mitnik, 2006. "Moving the Goalposts: Addressing Limited Overlap in the Estimation of Average Treatment Effects by Changing the Estimand," NBER Technical Working Papers 0330, National Bureau of Economic Research, Inc.
  7. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
  8. Ravallion, Martin, 2008. "Evaluating Anti-Poverty Programs," Handbook of Development Economics, Elsevier.
  9. Jalan, Jyotsna & Ravallion, Martin, 1998. "Behavioral responses to risk in rural China," Policy Research Working Paper Series 1978, The World Bank.
  10. Alberto Abadie & Guido W. Imbens, 2006. "Large Sample Properties of Matching Estimators for Average Treatment Effects," Econometrica, Econometric Society, vol. 74(1), pages 235-267, 01.
  11. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," Econometrica, Econometric Society, vol. 66(5), pages 1017-1098, September.
  12. Ravallion, Martin & Chen, Shaohua, 2005. "Hidden impact? Household saving in response to a poor-area development project," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2183-2204, December.
  13. Keisuke Hirano & Guido W. Imbens & Geert Ridder, 2000. "Efficient Estimation of Average Treatment Effects Using the Estimated Propensity Score," NBER Technical Working Papers 0251, National Bureau of Economic Research, Inc.
  14. Kanbur, Ravi & Zhang, Xiaobo, 1999. "Which Regional Inequality? The Evolution of Rural-Urban and Inland-Coastal Inequality in China from 1983 to 1995," Journal of Comparative Economics, Elsevier, vol. 27(4), pages 686-701, December.
  15. Jian, T & Sachs, J-D & Warner, A-M, 1995. "Trends in Regional Inequality in China," Papers 518, Harvard - Institute for International Development.
  16. Crump, Richard K. & Hotz, V. Joseph & Imbens, Guido W. & Mitnik, Oscar A., 2006. "Moving the Goalposts: Addressing Limited Overlap in Estimation of Average Treatment Effects by Changing the Estimand," IZA Discussion Papers 2347, Institute for the Study of Labor (IZA).
  17. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
  18. Park, Albert & Wang, Sangui & Wu, Guobao, 2002. "Regional poverty targeting in China," Journal of Public Economics, Elsevier, vol. 86(1), pages 123-153, October.
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