Poverty Exit and Entry in Poor Villages in China

Abstract

Rapid economic growth in China’s booming regions has left other areas of the country lagging behind. We shed light on the poverty dynamics of one such region by analyzing a census-like survey of three administrative villages of Guizhou province in 2004, 2006, 2009, and 2011. While the absolute poverty rate is decreasing sharply in the sample, households are highly vulnerable to shocks, and rates of entry or re-entry into poverty are high. Using logistic regression and multivariate a hazard model, we look for the determinants of both poverty exit and entry. We find that poverty entry and exit are both related to household characteristics, assets, and social capital. Rural-urban migration strongly increases the probability of poverty exit, while poverty entry is associated with disease and some major life events. Our results also point to informal networks and government transfers as means of poverty alleviation, and highlight the importance of smart targeting.