Measuring and Decomposing Relative Poverty in China

Abstract

Poverty is a critical issue in sustainable development, and the study of poverty has gradually shifted from absolute to relative poverty. This paper measures three types of relative poverty—strongly relative poverty (50% of median income), strongly relative poverty (50% of mean income), and weakly relative poverty. Then this paper decomposes the change of relative poverty into the growth component, redistribution component, and poverty line change component. Further, the intra- and inter-group decompositions of relative poverty change are carried out by considering the urban and rural population mobility components. We apply the China Health and Nutrition Survey (CHNS) data from 1989 to 2015 for an empirical study. The results show that: (1) In recent years, the change in relative poverty in China has shown a trend of low fluctuation (1989–1997), rising fluctuation (1997–2006), and high fluctuation (2006–2015). (2) In the decomposition of relative poverty change, the growth component has the most excellent effect on alleviating relative poverty, the redistribution component exacerbates the occurrence of relative poverty in most years and reduces it in a few years, and the poverty line change component offsets the poverty reduction effect of the growth component. (3) The change in relative poverty is decomposed by urban and rural sub-groups, and it is found that the population mobility from rural to urban can reduce the national relative poverty.