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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

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

Yin Zhang

Guanghua Wan (Contributor Webpage)

Oxford University Press

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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