The dynamics of relative poverty in China in a comparative perspective
|Day:||Thu 4 Jul|
In this paper, we explore the dynamics of relative poverty in China, contrasting the Chinese pattern against those found in Germany, the UK, and the US. Previous research has reported very impressive poverty reduction in China (see e.g. Ravallion, 2007). But most of these studies are based on repeated cross-sectional data. We make use of large-scale and nationally representative income panel data from these four countries, namely the China Family Panel Study, the German Socio-Economic Panel, the UK's Understanding Society, and the US's Panel Study of Income Dynamics. We focus on individuals of prime working age (31-55), and consider relative poverty rather than absolute poverty. We show that income volatility is very much higher in China than in the West, especially for those at the bottom rung of the income ladder. The risks of large income loss is also higher in China than in the West. Using two poverty lines and several poverty indices, we show that poverty rates not only is relative poverty rates are at a higher level in China, they are also more severe. Exploiting the panel nature of the data, we also consider transition rates into and out of poverty.