Abstract

For a long time, poverty theory has focused on facts that have already happened and are static, but neglects poverty dynamics to some degree, which has not changed until recent years. More and more economists are realizing the fact that poverty research cannot be limited to the contemporary population size of the poor statically, but should combine the dynamic process of poverty state of the poor at different period, which is based on the widely existed vulnerability to poverty and the need to design poverty polices which can dynamically target poverty as well as improve the efficiency of poverty reduction. Thus, the theme of the paper is the poverty dynamics of rural household in China, and the paper analyses the process and tendency of rural household escaping and falling into poverty in detail.

The paper proceeds as follows. Firstly, using the data of China Health and Nutrition Survey, the paper studies the translation between the poor and the non-poor as well as influence of the length of initial state on the translation by the methods of transformation matrix of poverty and survival analysis. The results show the process of household getting in and out of poverty coexists in asymmetric proportion, and most poor household can escape poverty quickly after a short period of being poor. What's more, the impact of the length of permanent poverty and non-poor on translation between the poor and the non-poor varies because of the different choice of absolute poverty line and relative poverty line. In terms of poverty dynamics, though, from the concept of absolute poverty, the poor household is very likely to flow upward, from the perspective of relative poverty, it shows the persistency of poverty which reveals the possibility of social stratum solidification. Secondly, by measuring, decomposing and predicting the vulnerability to poverty of rural household in China in a long period, the results demonstrate that the vulnerability to poverty of rural household declines in long term, but the risk is accumulating, which means the reason of household getting into poverty translates from lacking of ability to risks affecting income. In other words, the ability of rural household to earn is improving, but the attention to various risks should be enhanced, which has important sense on policy design. Finally, the paper tries to explain the impact of the behavior of the poor on poverty dynamics, which can provide a reasonable reason for poverty dynamics subjectively. Here we use the two indicators of“upgrading of the structure of expenditure”and“diversification degree of the expenditure”as household behaviors to study their influence on poverty dynamics by choosing the poor people engaging in traditional agriculture and stock raising in Guizhou. The results convey that on the one hand, when the core of production and operation expenditure changes from the low risk and low return traditional agriculture to the high risk and high return livestock breeding or the third industry, the probability of getting out of poverty is increasing greatly. On the other hand, for the poor household，the diversification of production and operation expenditure can help them get out of poverty and increase income, at the same time, in a low poverty line, the diverse investment can help non-poor household avoid getting into poverty, playing the role of insurance.

The policy implications are as follows. Firstly, besides improving the development ability of the poor, we should establish“safety net”to ensure less people falling into poverty, which reduces poverty by en ante action other than ex ante reaction. Secondly, we should advocates democracy and build dynamic poverty targeting system by participatory rural appraisal. Thirdly, we should increase income by the application of new technology and introduce social organizations to participate in agricultural system construction which can solve the concern of peasants entering new production field. Finally, the aged in rural areas should be given more attention when makes poverty reduction policy.

Keywords: Poverty Dynamics; Fall into Poverty; Out of Poverty; Vulnerability to Poverty; Anti-Poverty Policy