Pro-Rural Policies, Income and Inequality: Evaluating a Cash-for-Work Program in Rural China

GATE Working Paper Series No. 1415

42 Pages Posted: 21 May 2014

See all articles by Yu Chen

Yu Chen

University of Macau - Department of Economics

Sylvie Démurger

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE)

Date Written: May 20, 2014

Abstract

Despite the dramatic reduction of poverty in China over the past thirty-five years, poverty has not been fully eradicated in rural areas, and in the context of growing inequalities, it remains a national concern. This paper examines a local cash-for-work program launched in mountainous areas of Beijing municipality in December 2004, with a view to understanding both the challenges and achievements of pro-poor programs in China. Using original household survey data, we first highlight the fairly good targeting performance of the program towards the local poor. Second, participation equations provide evidence of increasing local income without crowding out local agricultural activities. Finally, a decomposition of household income inequality by source highlights the strongly equalizing effect of the program on peasants’ income.

Keywords: cash-for-work program, income source diversif ication, agricultural households, income inequality, China

JEL Classification: D31, O13, O15, O53

Suggested Citation

Chen, Yu and Démurger, Sylvie, Pro-Rural Policies, Income and Inequality: Evaluating a Cash-for-Work Program in Rural China (May 20, 2014). GATE Working Paper Series No. 1415, Available at SSRN: https://ssrn.com/abstract=2439223 or http://dx.doi.org/10.2139/ssrn.2439223

Yu Chen (Contact Author)

University of Macau - Department of Economics ( email )

Macau
China

Sylvie Démurger

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE) ( email )

93, chemin des Mouilles
Ecully, 69130
France
(33 4) 72 86 61 05 (Phone)
(33 4) 72 86 60 90 (Fax)

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