Household Income Dynamics in Rural China

Theoretical work has shown that nonlinear dynamics in household incomes can yield poverty traps and distribution-dependent growth. If this is true, the potential implications for policy are dramatic: effective social protection from transient pover...

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Main Authors: Jalan, Jyotsna, Ravallion, Martin
Format: Policy Research Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2014
Subjects:
WAR
Online Access:http://documents.worldbank.org/curated/en/2001/11/1631785/household-income-dynamics-rural-china
http://hdl.handle.net/10986/19436
id okr-10986-19436
recordtype oai_dc
spelling okr-10986-194362021-04-23T14:03:43Z Household Income Dynamics in Rural China Jalan, Jyotsna Ravallion, Martin ADJUSTMENT PROCESS ADVERSE IMPACT AGRICULTURAL PRODUCTION AGRICULTURE AUTOREGRESSION BUSINESS CYCLE CAPITAL ACCUMULATION CHRONIC POVERTY CHRONICALLY POOR COMPARATIVE ECONOMICS CONSUMPTION GROWTH CONSUMPTION INSURANCE CONSUMPTION SMOOTHING COUNTRY REGRESSIONS CREDIT MARKET DATA MODEL DATA SET DEPENDENT VARIABLE DEVELOPMENT ECONOMICS DYNAMIC PANEL ECONOMETRIC MODEL ECONOMETRICS ECONOMIC DYNAMICS ECONOMIC GROWTH ECONOMIC RESEARCH ECONOMIC REVIEW ECONOMIC STUDIES ECONOMIC THEORY ECONOMICS RESEARCH EMPIRICAL WORK EMPLOYMENT EQUILIBRIUM EXPENDITURES FAMINE FINANCIAL CRISES FINANCIAL DEVELOPMENT FINANCIAL POLICIES FORESTRY GROWTH MODELS GROWTH RATE GROWTH THEORIES HOUSEHOLD INCOME HOUSEHOLD INCOMES HOUSEHOLD SURVEYS INCOME INCOME GROUPS INCOME INEQUALITY INCOME REDISTRIBUTION INCOME RISK INCOME SHOCKS INCOMES INCREASING FUNCTION INDEPENDENT MEASUREMENT INDEPENDENT MEASUREMENT ERROR INFLATION INFORMAL INSURANCE INSURANCE LABOR PRODUCTIVITY LAGGED DEPENDENT LAND USE LDCS LINEAR MODEL LIQUIDITY LIVING STANDARDS LONG-RUN EQUILIBRIA LONG-RUN EQUILIBRIUM LOW INCOMES MACROECONOMICS MARKET ECONOMIES MARKET FAILURES MEAN CONSUMPTION MEAN INCOME MEAN INCOMES MEASUREMENT ERROR MONETARY POLICY MONOPOLIES MULTIPLE EQUILIBRIA NEGATIVE SHOCK PERMANENT INCOME POLICY RESEARCH POLICY STRATEGIES POOR POVERTY GAP POVERTY LINE PRODUCTIVITY PUBLIC ECONOMICS RAPID GROWTH RECIPROCITY REDISTRIBUTIVE POLICIES REPEATED SHOCKS SERIAL CORRELATION SERIAL DEPENDENCE SERIES OBSERVATIONS SURPLUS LABOR TARGETING TELECOMMUNICATIONS THEORETICAL MODELS TIME SERIES TRANSFER PAYMENTS TRANSITION ECONOMIES UNEMPLOYMENT WAR WEALTH HOUSEHOLD INCOME SOCIAL PROTECTION SYSTEMS REDISTRIBUTION INCOME GROWTH HOUSEHOLD CONSUMPTION HOUSEHOLD INCOME WEALTH Theoretical work has shown that nonlinear dynamics in household incomes can yield poverty traps and distribution-dependent growth. If this is true, the potential implications for policy are dramatic: effective social protection from transient poverty would be an investment with lasting benefits, and pro-poor redistribution would promote aggregate economic growth. The authors test for nonlinearity in the dynamics of household incomes and expenditures using panel data for 6,000 households over six years in rural southwest China. While they find evidence of nonlinearity in the income and expenditure dynamics, there is no sign of a dynamic poverty trap. The authors argue that existing private and social arrangements in this setting protect vulnerable households from the risk of destitution. However, their findings imply that the speed of recovery from an income shock is appreciably slower for the poor than for others. They also find that current inequality reduces future growth in mean incomes, though the "growth cost" of inequality appears to be small. The maximum contribution of inequality is estimated to be 4-7 percent of mean income and 2 percent of mean consumption. 2014-08-19T18:04:32Z 2014-08-19T18:04:32Z 2001-11 http://documents.worldbank.org/curated/en/2001/11/1631785/household-income-dynamics-rural-china http://hdl.handle.net/10986/19436 English en_US Policy Research Working Paper;No. 2706 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research East Asia and Pacific China
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
en_US
topic ADJUSTMENT PROCESS
ADVERSE IMPACT
AGRICULTURAL PRODUCTION
AGRICULTURE
AUTOREGRESSION
BUSINESS CYCLE
CAPITAL ACCUMULATION
CHRONIC POVERTY
CHRONICALLY POOR
COMPARATIVE ECONOMICS
CONSUMPTION GROWTH
CONSUMPTION INSURANCE
CONSUMPTION SMOOTHING
COUNTRY REGRESSIONS
CREDIT MARKET
DATA MODEL
DATA SET
DEPENDENT VARIABLE
DEVELOPMENT ECONOMICS
DYNAMIC PANEL
ECONOMETRIC MODEL
ECONOMETRICS
ECONOMIC DYNAMICS
ECONOMIC GROWTH
ECONOMIC RESEARCH
ECONOMIC REVIEW
ECONOMIC STUDIES
ECONOMIC THEORY
ECONOMICS RESEARCH
EMPIRICAL WORK
EMPLOYMENT
EQUILIBRIUM
EXPENDITURES
FAMINE
FINANCIAL CRISES
FINANCIAL DEVELOPMENT
FINANCIAL POLICIES
FORESTRY
GROWTH MODELS
GROWTH RATE
GROWTH THEORIES
HOUSEHOLD INCOME
HOUSEHOLD INCOMES
HOUSEHOLD SURVEYS
INCOME
INCOME GROUPS
INCOME INEQUALITY
INCOME REDISTRIBUTION
INCOME RISK
INCOME SHOCKS
INCOMES
INCREASING FUNCTION
INDEPENDENT MEASUREMENT
INDEPENDENT MEASUREMENT ERROR
INFLATION
INFORMAL INSURANCE
INSURANCE
LABOR PRODUCTIVITY
LAGGED DEPENDENT
LAND USE
LDCS
LINEAR MODEL
LIQUIDITY
LIVING STANDARDS
LONG-RUN EQUILIBRIA
LONG-RUN EQUILIBRIUM
LOW INCOMES
MACROECONOMICS
MARKET ECONOMIES
MARKET FAILURES
MEAN CONSUMPTION
MEAN INCOME
MEAN INCOMES
MEASUREMENT ERROR
MONETARY POLICY
MONOPOLIES
MULTIPLE EQUILIBRIA
NEGATIVE SHOCK
PERMANENT INCOME
POLICY RESEARCH
POLICY STRATEGIES
POOR
POVERTY GAP
POVERTY LINE
PRODUCTIVITY
PUBLIC ECONOMICS
RAPID GROWTH
RECIPROCITY
REDISTRIBUTIVE POLICIES
REPEATED SHOCKS
SERIAL CORRELATION
SERIAL DEPENDENCE
SERIES OBSERVATIONS
SURPLUS LABOR
TARGETING
TELECOMMUNICATIONS
THEORETICAL MODELS
TIME SERIES
TRANSFER PAYMENTS
TRANSITION ECONOMIES
UNEMPLOYMENT
WAR
WEALTH HOUSEHOLD INCOME
SOCIAL PROTECTION SYSTEMS
REDISTRIBUTION
INCOME GROWTH
HOUSEHOLD CONSUMPTION
HOUSEHOLD INCOME
WEALTH
spellingShingle ADJUSTMENT PROCESS
ADVERSE IMPACT
AGRICULTURAL PRODUCTION
AGRICULTURE
AUTOREGRESSION
BUSINESS CYCLE
CAPITAL ACCUMULATION
CHRONIC POVERTY
CHRONICALLY POOR
COMPARATIVE ECONOMICS
CONSUMPTION GROWTH
CONSUMPTION INSURANCE
CONSUMPTION SMOOTHING
COUNTRY REGRESSIONS
CREDIT MARKET
DATA MODEL
DATA SET
DEPENDENT VARIABLE
DEVELOPMENT ECONOMICS
DYNAMIC PANEL
ECONOMETRIC MODEL
ECONOMETRICS
ECONOMIC DYNAMICS
ECONOMIC GROWTH
ECONOMIC RESEARCH
ECONOMIC REVIEW
ECONOMIC STUDIES
ECONOMIC THEORY
ECONOMICS RESEARCH
EMPIRICAL WORK
EMPLOYMENT
EQUILIBRIUM
EXPENDITURES
FAMINE
FINANCIAL CRISES
FINANCIAL DEVELOPMENT
FINANCIAL POLICIES
FORESTRY
GROWTH MODELS
GROWTH RATE
GROWTH THEORIES
HOUSEHOLD INCOME
HOUSEHOLD INCOMES
HOUSEHOLD SURVEYS
INCOME
INCOME GROUPS
INCOME INEQUALITY
INCOME REDISTRIBUTION
INCOME RISK
INCOME SHOCKS
INCOMES
INCREASING FUNCTION
INDEPENDENT MEASUREMENT
INDEPENDENT MEASUREMENT ERROR
INFLATION
INFORMAL INSURANCE
INSURANCE
LABOR PRODUCTIVITY
LAGGED DEPENDENT
LAND USE
LDCS
LINEAR MODEL
LIQUIDITY
LIVING STANDARDS
LONG-RUN EQUILIBRIA
LONG-RUN EQUILIBRIUM
LOW INCOMES
MACROECONOMICS
MARKET ECONOMIES
MARKET FAILURES
MEAN CONSUMPTION
MEAN INCOME
MEAN INCOMES
MEASUREMENT ERROR
MONETARY POLICY
MONOPOLIES
MULTIPLE EQUILIBRIA
NEGATIVE SHOCK
PERMANENT INCOME
POLICY RESEARCH
POLICY STRATEGIES
POOR
POVERTY GAP
POVERTY LINE
PRODUCTIVITY
PUBLIC ECONOMICS
RAPID GROWTH
RECIPROCITY
REDISTRIBUTIVE POLICIES
REPEATED SHOCKS
SERIAL CORRELATION
SERIAL DEPENDENCE
SERIES OBSERVATIONS
SURPLUS LABOR
TARGETING
TELECOMMUNICATIONS
THEORETICAL MODELS
TIME SERIES
TRANSFER PAYMENTS
TRANSITION ECONOMIES
UNEMPLOYMENT
WAR
WEALTH HOUSEHOLD INCOME
SOCIAL PROTECTION SYSTEMS
REDISTRIBUTION
INCOME GROWTH
HOUSEHOLD CONSUMPTION
HOUSEHOLD INCOME
WEALTH
Jalan, Jyotsna
Ravallion, Martin
Household Income Dynamics in Rural China
geographic_facet East Asia and Pacific
China
relation Policy Research Working Paper;No. 2706
description Theoretical work has shown that nonlinear dynamics in household incomes can yield poverty traps and distribution-dependent growth. If this is true, the potential implications for policy are dramatic: effective social protection from transient poverty would be an investment with lasting benefits, and pro-poor redistribution would promote aggregate economic growth. The authors test for nonlinearity in the dynamics of household incomes and expenditures using panel data for 6,000 households over six years in rural southwest China. While they find evidence of nonlinearity in the income and expenditure dynamics, there is no sign of a dynamic poverty trap. The authors argue that existing private and social arrangements in this setting protect vulnerable households from the risk of destitution. However, their findings imply that the speed of recovery from an income shock is appreciably slower for the poor than for others. They also find that current inequality reduces future growth in mean incomes, though the "growth cost" of inequality appears to be small. The maximum contribution of inequality is estimated to be 4-7 percent of mean income and 2 percent of mean consumption.
format Publications & Research :: Policy Research Working Paper
author Jalan, Jyotsna
Ravallion, Martin
author_facet Jalan, Jyotsna
Ravallion, Martin
author_sort Jalan, Jyotsna
title Household Income Dynamics in Rural China
title_short Household Income Dynamics in Rural China
title_full Household Income Dynamics in Rural China
title_fullStr Household Income Dynamics in Rural China
title_full_unstemmed Household Income Dynamics in Rural China
title_sort household income dynamics in rural china
publisher World Bank, Washington, DC
publishDate 2014
url http://documents.worldbank.org/curated/en/2001/11/1631785/household-income-dynamics-rural-china
http://hdl.handle.net/10986/19436
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