Working Paper: NBER ID: w28147
Authors: Shaohua Chen; Martin Ravallion
Abstract: The widely held view that China has greatly reduced income poverty over the last 40 years does not accord with all the evidence. The paper tries to reconcile the conflicting findings. The fact that strongly-relative measures show rising poverty is easily understood, since such measures depend solely on relative distribution, and inequality in China has been rising until recently. More surprising, and revealing, is the story told by the official lines, which were revised twice since the original 1985 line. The paper shows that the official lines are neither absolute nor strongly relative. Rather, they are weakly relative, with a positive elasticity to the mean that is less than unity. Along with rising inequality, this feature slowed the pace of measured poverty reduction when compared to absolute measures. Nonetheless, substantial progress against poverty is indicated, as we confirm using our independent, and higher, weakly-relative lines calibrated to cross-country data.
Keywords: Poverty; Inequality; China
JEL Codes: I32; O15; O18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| inequality (D63) | poverty rates (I32) |
| mean income (D31) | poverty lines (I32) |
| official poverty lines (I32) | measured poverty reduction (I32) |
| poverty measures (I32) | economic conditions (E66) |