Off-farm employment and poverty alleviation in rural China

Abstract

Two phenomena in the history of China’s economic growth during the last four decades are the increase in the share of off-farm employment and the progress in poverty alleviation in rural China. Although both of them have been well documented in the literature, less is known about the linkage between the two. To better understand the role that off-farm employment has played in poverty alleviation in rural China is critically important not only for China but also for those countries that are trying to reduce poverty. Here, we examine the impact of off-farm employment on poverty alleviation in rural China. Using the data from two nationally representative household panel surveys (China National Rural Survey and China Rural Development Survey), this paper provides supporting evidence that off-farm employment contributes to poverty alleviation in rural China. Specifically, if household participation in off-farm employment increases by 10 percentage points, the likelihood for a non-poor household to fall into poverty will decrease by 0.88 percentage point whereas the likelihood for a poor household to climb out of poverty will increase by 3.5 percentage points. In a word, off-employment can not only prevent rural residents to fall into poverty but also help those already in poverty climb out of it.