Development of Minimum Livelihood Guarantee Programs in Urban China: An Empirical Analysis Based on 31 Regions Over 2003-2013

Abstract

The Minimum Livelihood Guarantee (MLG) system is functioned as the last resort safety net for China’s urban poor people and plays a substantial role in poverty reduction. Over the past few years, reforms have been taken to increase the benefit levels and to provide minimum income protection for households which are most vulnerable to poverty. However, so far little is known about how the urban MLG system has developed across regions and how the regional differences have changed over time. Since the administration of the MLG system in China is decentralized, regional differences help us to understand the effectiveness of the MLG system in poverty alleviation. Therefore, this paper provides new empirical insights into the MLG development across 31 regions in urban China between 2003 and 2013. In addition to the widely used indicators like benefit levels and number of benefit recipients, we construct the indicators of MLG replacement rates to measure the generosity of the benefits in relation to income from work. The results show that first, the development of the urban MLG system in China has followed different tracks before and after 2008. Since 2008, the governments have made great efforts to increase the generosity of the MLG system while put more stringent conditions on MLG beneficiaries. Consequently, the MLG standards increased significantly while MLG recipients decreased enormously. Second, the development of the urban MLG programs varies considerably across regions. However, China has shown convergence of the generosity levels of the MLG programs across regions since 2008.