Multidimensional Deprivation and Subgroup Heterogeneity of Rural Households in China: Empirical Evidence from Latent Variable Estimation Methods

After all the rural poor are lifted out of poverty under the current government policy, the income gap between urban and rural residents in China will become relatively visible and the problem of unequal opportunities will be more prominent. Based on the multidimensional deprivation framework and the need for a better life, this article constructs a deprivation analytical framework for rural households in China. For measuring the multidimensional deprivation, a two-parameter item response model was used to evaluate the reliability of the indicators based on the data of rural households’ surveys in six provinces of China. The test information function shows that the test information curve is biased to the right, and the deprivation index can provide more effective information for the deprived households. The project parameter estimation shows that the difficulty of material needs, necessary social participation and social security indicators are high, and the difficulty of high-value durable consumer goods such as cars and air conditioners, emergency savings, and paying for serious diseases is low. Further Differential item functioning (DIF) tests showed that individual indicators had DIFs across different age, sex, and regional groups, but their effect on latent deprivation variables was very small. From the perspective of latent subgroup differences, the Latent class model (LCM) divided households into four subgroups including severe deprivation, moderate deprivation, mild deprivation and non-deprivation. The probability of falling into the group of more severe deprivation was significantly higher among the households who experienced risk and belong to ethnic minority groups. On the other hand, family income, business livelihood, human capital and social capital can significantly reduce the probability of falling into more severe deprivation.