How Effective are Decentralized Anti-poverty Programs?

Abstract

This study examines the effectiveness of China's National Poor Counties (NPC) program, a decentralized anti-poverty initiative, by analyzing five rounds of individual-level panel data from 1988 to 2008. The impact of two waves of the NPC program (1994 and 2001) is evaluated utilizing a panel fixed-effects regression model. The results indicate substantial positive effects, with residents in NPC counties experiencing a 47 percent income increase, 3.1 percent higher employment rates, and a 5.7 percent rise in household expenditure from 1988 to 2008, in comparison with non-NPC counties. Notably, the program benefited vulnerable populations, dispelling concerns about “elite capture.” The study also reveals that evolving policy focus has played a pivotal role in sustaining the effects of the program over time. The 1994 round prioritized low-skilled employment, and the 2001 wave emphasized productivity enhancement through skills development. These findings highlight the continued efficacy of decentralized anti-poverty efforts.