Monitoring and Evaluating the Poverty Reduction and Social Protection: A Case Study of China Shaohua Chen Development Research Group, World Bank Further reading: Martin Ravallion and Shaohua Chen, "China's (Uneven) Progress against Poverty: An Update," World Bank Policy Research Working Paper, forthcoming

Outline Monitoring and evaluating poverty and inequality in China China’s poverty line Evaluating social protection program using household survey data –Urban Dibao –Southwest poverty reduction project

1. Monitoring and evaluating poverty and inequality in China

4 Trend increase in income inequality but more so in some periods Signs of that inequality might be stabilizing at around Gini=47% (42% with COL adjustment)

5 Rising inequality between urban and rural areas since mid 1990s

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The recent signs of a stabilization of inequality are due to rural areas Rising ratio of urban mean to rural mean + rising urban inequality =>The stabilization is mainly due to rural areas. Pro-poor policies in rural areas. 7 Rural Urban Gini index (%) But is this sustainable? There were also signs that inequality was stabilizing in mid-1990s, but not sustained.

8 Nonetheless, China has made huge overall progress against absolute poverty

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2. China’s poverty line -- Overtime comparison -- International comparison

China’s poverty lines Yuan/year$/day (2005 prices)(1993 PPP)(2005 PPP) Old official rural poverty line683$0.77$0.63 Rural low income line (2008)1196$1.13$0.97 Comparable rural/urban poverty line (2002) Rural (average)925$1.05$0.85 Urban (average)1271$1.44$0.85 International poverty line 951$1.08 Rural1361$1.25 Urban1865$1.25

Poverty line – Asia $/person/month in 2005 PPP

Poverty line – Country with Similar PC $/person/month in 2005 PPP

Poverty line – Country with Similar PL $/person/month in 2005 PPP

15 China has made huge overall progress against poverty cross various PL

Policy implications China has made huge overall progress against poverty cross wide range of poverty lines (PL); Compare with the countries at same development level, China’s PL is still low; As China’s rapid growth continue, new PL will be needed every other years; It is better to set up several PL for different programs/time frame. 16

3. Evaluating the impacts of poverty reduction and social protection program using household survey data

Impact evaluation: key issues the counterfactual – what will happen without the program; Selection bias – the participants of poverty reduction or social protection program usually poorer than non participants. 18

Evaluation strategy: Matching/weighting + diff-in-diff Propensity score matching/weighting: –Matching/weighting on observed initial characteristics likely to jointly influence poor-area targeting and how incomes evolve over time. Difference-in-difference: –Difference in gains over time between participants and non-participants. –This eliminates any time-invariant bias due to miss- matching, selection bias, omitted variables etc 19

Some results from SW poverty reduction project 20

Income poverty DD impact on headcount index DD impact on headcount index

Consumption poverty DD impact on headcount index

Some results from China urban Dibao study 25

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Comparison between Beijing and Gansu 27

Lessons we learnt from these studies Start the monitoring and evaluation as soon as the project start; Choose as many non participants (comparison group) as possible; Using existing data whenever if possible and link different data (household surveys, census etc.) together: –reduce the cost –increase the coverage

<5% 5%-10% 10%-15% 15%-20% >=30% 20%-30% Yunnan: Prefecture poverty incidence N=126

<5% 5%-10% 10%-15% 15%-20% >=30% 20%-30% Yunnan: County poverty incidence N=126

<5% 5%-10% 10%-15% 15%-20% >=30% 20%-30% Township poverty incidence N=1571