China’s record in reducing rural poverty has been nothing short of spectacular and should be a source of lessons for other countries. Rural poverty reduction is generally sought in the role of agriculture in contributing to farm incomes. However, non-farm employment in rural areas can also be a major contributor. Using detailed household survey data from Hubei province, we simulate the counterfactual of what rural households’ incomes, poverty, and inequality would be in the absence of access to non-farm sources of income. Results show that, without non-farm employment, rural poverty would be much higher and deeper, and that income inequality would be higher as well. We find that education, proximity to town, neighborhood effects, and village effects are crucial in helping particular households gain access to these opportunities. We also find that those who stay as pure farmers have non-observable characteristics that make them much more productive in agriculture, implying positive selection on these characteristics. Moreover, participation in non-farm activities has a positive spillover effect on household farm production.

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The Role of Non-Farm Incomes in Reducing Rural Poverty and Inequality in China

Urban economic reform and access to health care coverage in the People's Republic of China

Is Chinese provincial real GDP per capita nonstationary?: Evidence from multiple trend break unit root tests

Rural industrialization: An engine of prosperity in postreform rural China

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Crop Farming in China: Technology, Markets, Institutions and the Use of Pesticides

The first question addressed by this paper relates to the very high growth rates achieved by China's rural industries during the post-reform period. While growth rates have undoubtedly been extremely high, they can only be put in a proper perspective when growth in different components of the sector (i.e. township- and village-owned and privately owned industries) is examined separately and compared with performance before the reforms. In this regard, an important finding of the paper is that as far as township and village industries are concerned, growth rates in the post-reform period do not represent a sudden break from the rates of the earlier period — particularly the 1970s. It is mainly in the emergence and growth of private enterprises that the growth experience of the 1980s differs substantially from that of the 1970s. The sharp decline in the growth of all rural industries in 1989 does not appear to mark a reversal in their growth environment, but the beginning of a period of consolidation and rationalization; and, contrary to popular notion, private enterprises are not the worst sufferers in this process. Finally, the paper looks at regional imbalance. Historically, rural industries in China have been concentrated more in the eastern provinces along the coast, and this regional concentration has increased during the post-reform period of high growth.

Rizwanul Islam

Papers

Growth of Rural Industries in Post‐reform China: Patterns, Determinants and Consequences

What Has Been Happening to Rural Income Distribution in Bangladesh