Income growth in China has led to remarkable income poverty reduction, which
is not paralleled by better nutrition. This paper uses the household data in both
rural and urban China over the period 1989-2009 to investigate the relationship
between income growth and nutrient intake, with emphasis on rising nutrition
inequality and various uncertainties facing households’ livelihood in terms of
rising and volatile prices of foods. A point of departure of the present study is to
model (i) heterogeneity in the effect of household income and nutritional intake
and (ii) the endogenoity of household income to provide a robust estimate for the
effect of income on nutrition at different levels of nutritional intake. To do this,
we propose to combine recent seminal works by Canay (2011) and Lee (2007) to
estimate the quantile instrumental variable (IV) panel model. We find that
income growth, especially increases in crop income, can raise nutrient intake for
the malnourished rural households, while business and wage income tend to
increase urban households’ nutrient intake and help narrow nutrition inequality.
Uncertainties yield various nutritional outcomes, depending on specific food
commodities.