The thesis examines three issues related to Chinese rural households' well-being and poverty status over the period of 1989-2006. Each of them corresponds to a substantive chapter (Chapter 3-5). Chapter 1 introduces the stages of poverty reduction in rural China following the reforms that started in 1978 and discusses some problems related to further poverty reduction and increases in welfare. Chapter 2 provides a general description of the data set used in the substantive chapters. It includes a discussion of the construction of the panel and the justification of the construction and use of the key economic variables. It also uses this panel to provide some preliminary explorations on households' poverty status and inequality. Chapter 3 examines the welfare loss brought about by the increasing uncertainty attached to households' consumption flows. Along with significant economic growth over more than three decades, rural households' livelihood has become more uncertain in terms of greater volatility and inequality in their consumption. Our estimate is that households' welfare would have risen up by approximately one third if there were no such uncertainties. Farmers and the chronically poor appear to suffer most among all sub-groups from the welfare loss associated with this uncertainty. Chapter 4 extends the existing literature on poverty in rural China from a perspective of households' agricultural asset holdings. The analysis finds multiple equilibria in asset dynamics. In the presence of limited insurance, households' exposure to various shocks and risk forces them to engage in conservative livelihood strategies: they may prefer low-risk low-return production to more profitable but riskier investment in asset accumulation. As a result, some households may be trapped into lower incomes in the long-term. Based on the findings in Chapter 4, Chapter 5 empirically identifies the dynamic asset threshold. It categorises households into either the downward or upward mobility group in the long-term. Then, this chapter measures to what extent falling below this asset threshold may affect households' probabilities of being poor. Both static and dynamic estimates suggest that insufficient asset holdings substantially increase the chances of falling into poverty. Chapter 6 summarises policy implications indicated by the empirical analyses in three substantive chapters. Overall, education, health insurance and off-farm employment appear to be the key factors if there is to be a further improvement in Chinese rural households' welfare and reduction in poverty.
- Rural China