This paper measures rural poverty in Hubei Province and Inner Mongolia in China. The
poverty lines we derived by Ravallion’s method differ from the official Chinese poverty lines.
The official pan-country poverty line underestimates rural poverty in Hubei Province and
overestimates rural poverty in Inner Mongolia.
Poverty determinants are estimated by Logit as well as Probit models. The study notes
that factors such as living in a mountainous area, lack of better irrigation conditions, a large
family size, few fixed assets, few land owned and sole dependence on agriculture as a
livelihood source would make a rural household more vulnerable to poverty. On the other
hand, a rural household whose members are either better educated or trained laborers
would statistically be less poor.
The growth-redistribution decomposition reveals that for all the three FGT indexes in
Hubei province, income growth contributed much to the alleviation of poverty, while the
redistribution or inequality effects counteracted the growth effects and worsened poverty.
The poverty incidence decomposition results reveal that about one third of the growth
effects had been counteracted by the redistribution effects. This implies that future
anti-poverty programs should pay more attention to solving the inequality problem in China.
Poverty dominance analysis also helps us better understand the poverty situation. It
reveals that rural poverty in Inner Mongolia is more severe than that in Hubei, and that
poverty incidence in Hubei has lessened from 1997 to 2003, which are the same findings
as those drawn from deriving poverty lines.