Classifying Livelihood Strategies Adopting the Activity Choice Approach in Rural China

The classification of livelihood strategies is important for designing effective and targeted poverty-reducing strategies. This paper classified livelihood strategies adopting the activity choice approach and compared differences among income levels, asset endowments, poverty rates, and poverty causes of different household clusters to provide bases for the identification of targeted poverty-reducing strategies. By making the two-step cluster analysis, 2042 households were divided into four clusters. Agricultural households get a relatively low income because of the reliance on agricultural production and the lack of required assets to enter more remunerative livelihood strategies. Self-employment is the most remunerative livelihood strategy and high physical and financial capital accumulations are the premise of adopting a self-employed strategy. Featured with a medium-level income and asset endowments, wage-employed households benefit from a more-educated labor force and shoulder a heavy burden caused by children’s education at the same time. Besides, rural households face a series of social issues from labor migration, especially self-employed and wage-employed households. Non-labor households have a low-level income and asset endowments with older family members and an unhealthier labor force caused mainly by the aging population and accompanying diseases and disabilities. The transfer income-oriented non-labor households are the main object of poverty alleviation.