The Role of Non-Farm Incomes in Reducing Rural Poverty and Inequality in China
Chinaâ€™s record in reducing rural poverty has been nothing short of spectacular and should be a source of lessons for other countries. Rural poverty reduction is generally sought in the role of agriculture in contributing to farm incomes. However, non-farm employment in rural areas can also be a major contributor. Using detailed household survey data from Hubei province, we simulate the counterfactual of what rural householdsâ€™ incomes, poverty, and inequality would be in the absence of access to non-farm sources of income. Results show that, without non-farm employment, rural poverty would be much higher and deeper, and that income inequality would be higher as well. We find that education, proximity to town, neighborhood effects, and village effects are crucial in helping particular households gain access to these opportunities. We also find that those who stay as pure farmers have non-observable characteristics that make them much more productive in agriculture, implying positive selection on these characteristics. Moreover, participation in non-farm activities has a positive spillover effect on household farm production.
|Date of creation:||01 Mar 2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (510) 642-3345
Fax: (510) 643-8911
Web page: http://www.escholarship.org/repec/are_ucb/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Khan, Azizur Rahman & Riskin, Carl, 2001. "Inequality and Poverty in China in the Age of Globalization," OUP Catalogue, Oxford University Press, number 9780195136494.
- McMillan, John & Whalley, John & Zhu, Lijing, 1989. "The Impact of China's Economic Reforms on Agricultural Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 781-807, August.
- Islam, Rizwanul & Hehui, Jin, 1994. "Rural industrialization: An engine of prosperity in postreform rural China," World Development, Elsevier, vol. 22(11), pages 1643-1662, November.
- Escobal, Javier, 2001. "The Determinants of Nonfarm Income Diversification in Rural Peru," World Development, Elsevier, vol. 29(3), pages 497-508, March.
- Heckman, James J, 1979.
"Sample Selection Bias as a Specification Error,"
Econometric Society, vol. 47(1), pages 153-61, January.
- Zhu, Ling & Jiang, Zhongyi, 1993. "From Brigade to Village Community: The Land Tenure System and Rural Development in China," Cambridge Journal of Economics, Oxford University Press, vol. 17(4), pages 441-61, December.
- Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
- Leones, J P & Feldman, S, 1998. "Nonfarm Activity and Rural Household Income: Evidence from Philippine Microdata," Economic Development and Cultural Change, University of Chicago Press, vol. 46(4), pages 789-806, July.
- Knight, John & Song, Lina, 1993.
"The Spatial Contribution to Income Inequality in Rural China,"
Cambridge Journal of Economics,
Oxford University Press, vol. 17(2), pages 195-213, June.
- 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.
- Nee, Victor & Young, Frank W, 1991. "Peasant Entrepreneurs in China's "Second Economy": An Institutional Analysis," Economic Development and Cultural Change, University of Chicago Press, vol. 39(2), pages 293-310, January.
- Jean-Pierre Lachaud, 1999.
"Envois de fonds, inégalité et pauvreté au Burkina Faso,"
Revue Tiers Monde,
Programme National Persée, vol. 40(160), pages 793-827.
- Jean-Pierre Lachaud, 1999. "Envoi de fonds, inégalité et pauvreté au Burkina Faso," Documents de travail 40, Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV.
- Stark, Oded & Taylor, J Edward & Yitzhaki, Shlomo, 1986. "Remittances and Inequality," Economic Journal, Royal Economic Society, vol. 96(383), pages 722-40, September.
- Bhalla, A. S., 1990. "Rural-urban disparities in India and China," World Development, Elsevier, vol. 18(8), pages 1097-1110, August.
- Chinn, Dennis L, 1979. "Rural Poverty and the Structure of Farm Household Income in Developing Countries: Evidence from Taiwan," Economic Development and Cultural Change, University of Chicago Press, vol. 27(2), pages 283-301, January.
- Yaohui Zhao, 1999. "Leaving the Countryside: Rural-to-Urban Migration Decisions in China," American Economic Review, American Economic Association, vol. 89(2), pages 281-286, May.
- Shand, R T, 1987. "Income Distribution in a Dynamic Rural Sector: Some Evidence from Malaysia," Economic Development and Cultural Change, University of Chicago Press, vol. 36(1), pages 35-50, October.
When requesting a correction, please mention this item's handle: RePEc:cdl:agrebk:qt7ts2z766. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lisa Schiff)
If references are entirely missing, you can add them using this form.