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Dissecting the provincial relative poverty dynamics in China: a new four-dimensional decomposition approach

Author

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  • Weihong Sun
  • Manding Wang
  • Ding Liu

Abstract

Purpose - This study investigates relative poverty in China against its rapid economic growth and poverty reduction efforts, aiming to understand the impact of evolving poverty lines and rural-urban disparities. Design/methodology/approach - Utilizing micro-survey data and a novel four-dimensional decomposition method, the research decomposes provincial relative poverty changes in China into poverty line and income distribution effects. The poverty line effect is further broken down into the extensive and intensive components, and the impact of income distribution into the growth and inequality effects, offering a detailed examination of their roles in urban and rural contexts. Findings - The findings indicate that economic growth significantly mitigates the incidence, depth and severity of relative poverty across both settings, whereas income inequality exacerbates these aspects. Additionally, changes in the poverty line through the extensive and intensive effects markedly elevate relative poverty levels. Despite overall reductions, rural areas continue to face higher poverty rates than urban regions, emphasizing the necessity for targeted poverty alleviation policies. Originality/value - This paper provides a novel perspective by dissecting China’s relative poverty dynamics through a four-dimensional analysis, highlighting the importance of considering economic growth, income inequality and the poverty line adjustments. It underlines the need for policies that specifically address the nuances of relative poverty, including the persistent rural-urban divide, contributing valuable insights for more effective poverty alleviation strategies.

Suggested Citation

  • Weihong Sun & Manding Wang & Ding Liu, 2024. "Dissecting the provincial relative poverty dynamics in China: a new four-dimensional decomposition approach," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 17(2), pages 252-268, November.
  • Handle: RePEc:eme:caerpp:caer-02-2024-0054
    DOI: 10.1108/CAER-02-2024-0054
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    More about this item

    Keywords

    Relative poverty; Poverty decomposition; Poverty index; Poverty line effect; Income distribution effect; D31; I32; O12; O15;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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