Inequality of rural residents’ income in China since the targeted poverty alleviation strategy: New trends, causes, and policy implications

Abstract

Poverty and income inequality are problems faced by many countries including China. Since the implementation of Targeted Poverty Alleviation (TPA), absolute poverty has been eradicated, meanwhile, Chinese rural residents' income and inequality have experienced unprecedented new dynamics, but still, very few studies have focused on them. Hence, we attempt to examine the new trends in Chinese farmers' income inequality and to understand its causes during this period. We observe that China's urban-rural income ratio has been shrinking and the urban-rural inequality has been decreasing from 2014 to 2021. The reduction in the Theil index indicates a decrease in the regional inequality of farmers' income as well, and the decline in inter-regional inequality among eight economic zones contributes about 80% to increased equality. These new trends are caused by the fact that, with the TPA, the incomes of rural residents especially that in destitute areas, grew faster than that of urban residents and farmers in prosperous areas. The higher share of non-agricultural industry and agricultural mechanization level have significant positive impact on regional equality of farmers' income, while urban-rural dual structure has significant negative inhibitory effects. The lowest farmers' income and the highest inequality in the Northwest, and the slowest growth in the Northeast deserve more attention in rural Revitalization. From these findings, we propose four policy implications that would be applied to improve Chinese farmers' income equality, govern relative poverty, and achieve common prosperity in the post-poverty era.