The dynamics of relative poverty in China in a comparative perspective

Abstract

I use household panel data to study the dynamics of relative poverty in China, Germany, the United Kingdom, and the United States. Compared to the three Western countries, not only is relative poverty more common in China, it is also deeper and more severe. Transient poverty accounts for less than half of the total poverty in Germany or the US, but about two-thirds of that in China or the UK. Over three waves, 87% of Germans, 78% of Britons, 71% of Americans, but only 46% of Chinese were never poor. Using a multinomial logistic regression model, the determinants of poverty are found to be very similar across the four countries. But the variance explained by that model is much smaller for China than for the three Western countries. The findings of this paper also challenge some existing understanding of poverty dynamics in general.