Poverty Dynamics of Households in strongRuralstrong China.pdfVIP

Katsushi S. IMAI Jing YOU Poverty Dynamics of Households in Rural China KATSUSHI S. IMAI† and JING YOU*‡ † Economics, School of Social Sciences, University of Manchester Research Institute for Economics and Business Administration (RIEB), Kobe University: Email: Katsushi.Imai@manchester.ac.uk ‡ School of Agricultural Economics and Rural Development, Renmin University of China Email: jing.you@ First Draft: 17th October 2011 (An Old Title: “Poverty Dynamics of Households in Rural China: Identifying Multiple Pathways for Poverty Transition) st This Draft: Revised on 1 June 2013 Abstract The objective of our study is to identify patterns and causes of households’ transitions into and out of poverty using the long household panel data on rural China in the period 1989-2009. We propose a discrete-time multi-spell duration model that not only corrects for correlated unobserved heterogeneity across transitions and various destinations within the transition, but also addresses the endogeneity due to dynamic selection associated with household’s livelihood strategies. Duration dependence is generally found to be negative for both poverty exit and entry. The househol