Abstract
BackgroundAnti-poverty has always been an important issue to be settled. What policies should be selected to help individuals escaping from the poverty trap: by directly offering transfer payments or indirectly providing public services? This paper is among the first to explore the effects of public anti-poverty programs system in China.MethodsWe Using unbalanced panel data of China Health and Nutrition Survey (CHNS) from 1989 to 2009, we demonstrate how the individual poverty status is determined through a four-staged simultaneous model. We choose the 3SLS (Three Staged Linear Squared) methodology to do the estimation.ResultsGTPs (Government Transfer Payments) don’t have positive effects on poverty reductions. The results demonstrate that GTPs increasing by 10% makes private transfer payments decrease by 3.9%. Meanwhile, GTPs increasing by 10% makes the household income decreased by 27.1%. However, public services (such as medical insurance, health services, hygiene protection etc.) have significantly positive impacts on poverty reduction. Public services share a part of living cost of the poor, and are conducive for people to gain higher household income.ConclusionsGTPs given by governments are not effective in reducing the poverty, as a result of “crowd-out effect” and “inductive effect”. However, public services are suggested to be adopted by governments to help the poor out of the poverty trap.
Highlights
Anti-poverty has always been an important issue to be settled
Notes: To identify the mechanism, we introduce the interactive term between the poverty status and Government transfer payments (GTP) into Private transfer payments (PTP) determination specification
We secondly examine the inductive effect of GTP on household income
Summary
Anti-poverty has always been an important issue to be settled. What policies should be selected to help individuals escaping from the poverty trap: by directly offering transfer payments or indirectly providing public services? This paper is among the first to explore the effects of public anti-poverty programs system in China. There are still a number of people suffering from poverty. Since the mid-1980s, Chinese government has implemented a series of public policies to fight against poverty, including heavy investment on antipoverty programs. The anti-poverty work becomes more and more difficult to step forward. Some new problems, known as “temporary poverty” and “non poverty-back-to-poverty” raise up. They somehow challenged the sustainability of the on-going anti-poverty work. A large number of people are migrating from rural areas into cities nowadays, and they may become the potential poor as a result of higher living cost in cities
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