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Inequality and Growth in Modern China$
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Guanghua Wan

Print publication date: 2008

Print ISBN-13: 9780199535194

Published to Oxford Scholarship Online: May 2008

DOI: 10.1093/acprof:oso/9780199535194.001.0001

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Poverty Reduction in China: Trends and Causes

Poverty Reduction in China: Trends and Causes

Chapter:
(p.33) 3 Poverty Reduction in China: Trends and Causes
Source:
Inequality and Growth in Modern China
Author(s):

Yin Zhang

Guanghua Wan (Contributor Webpage)

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199535194.003.0003

This chapter investigates the trends and causes of poverty in China in the 1990s by applying the Shapley decomposition to unit-record household survey data. The changes in poverty trends are attributed to two proximate causes; income growth and shifts in relative income distribution. The Foster-Greer-Thorbecke measures are computed and decomposed, with different datasets and alternative assumptions about poverty lines and equivalence scales. Among the robust results are: (1) both income growth and favourable distributional changes can explain China's remarkable achievement in combating poverty in rural areas during the first half of the 1990s; and (2) in the second half of the 1990s, both rural and urban China suffered from rapidly rising inequality and stagnant income growth, leading to a slow-down in poverty reduction, even reversal of poverty trend.

Keywords:   Shapley decomposition, unit-record data, Foster-Greer-Thorbecke measures, rural poverty, stagnant income growth

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