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CHINESE POVERTY: ASSESSING THE IMPACT OF ALTERNATIVE ASSUMPTIONS

Authors


  • Note: This study has been made possible by support from the Bureau of Development Policy and the International Poverty Center of the United Nations Development Program. We wish to thank Terry McKinley for facilitating this support and for his comments on the paper. We would like especially to thank Shaohua Chen, Yan Fang, Azizur Rahman Khan, Albert Park, Martin Ravallion and Li Shi for their assistance with queries, Carl Riskin and seminar participants at Columbia University for their helpful comments, Prabhjot Kaur and Zeest Haider for research assistance, and the Editor and two anonymous referees for helpful suggestions.

*Sanjay G. Reddy, Dept of Economics, Barnard College and School of International and Public Affairs, Columbia University, New York, NY 10027, USA (sr793@columbia.edu).

Abstract

This paper investigates how estimates of the extent and trend of consumption poverty in China between 1990 and 2004 vary as a result of alternative plausible assumptions concerning the poverty line and estimated levels of consumption. Our methodology focuses on the following sources of variation: purchasing power exchange rates (used to convert an international poverty line), alternative levels and distributions of private incomes, alternative estimates of the propensity to consume of different income groups, and alternative spatial and temporal price indices. We report national, urban and rural poverty estimates corresponding to distinct assumptions. It is widely believed that substantial poverty reduction took place in China in the 1990s, and we find this conclusion to be largely robust to the choice of assumptions, although estimates of the extent of Chinese poverty, and therefore of world poverty, in any year are greatly influenced by this choice.

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