Comparing poverty among older people in urban China internationally

China Quarterly

Volumn , Issue 190, 2007, Pages 451-465

  Saunders, Peter ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

AGING POPULATION; ECONOMIC REFORM; INCOME DISTRIBUTION; LIVING STANDARD; POVERTY DETERMINANT; SOCIOECONOMIC STATUS; URBAN AREA;

ASIA; CHINA; EURASIA; FAR EAST;

EID: 34547829081     PISSN: 03057410     EISSN: 14682648     Source Type: Journal    
DOI: 10.1017/S0305741007001282     Document Type: Article

References (72)

1. Asian Development Bank, Asian Development Outlook 2000 (Oxford: Oxford University Press, 2000), p. 179.
2. See OECD, Maintaining Prosperity in an Ageing Society (Paris: OECD, 1988)
3. Ageing and Income. Financial Resources and Retirement in 9 OECD Countries (Paris: OECD, 2001)
4. and M.F. Föster and M.M. d'Ercole, "Income distribution and poverty in OECD countries in the second half of the 1990s," OECD Social, Employment and Migration Working Paper No. 22 (Paris: OECD, 2005).
5. The OECD study by Föster and d'Ercole is typical in its emphasis on the role of pension systems in protecting older people from poverty. This study also pays attention to the role of housing costs, which can exert a great influence on how countries rank in terms of aged poverty rates. Other studies include G. Bonoli, The Politics of Pension Reform, Institutions and Policy Change in Western Europe (Cambridge: Cambridge University Press, 2000)
6. and J. Williamson and T.M. Smeeding, "Sliding into poverty? Cross-national patterns of income source change and income decay inold age," Working Paper No. 388, Luxembourg Income Study, Maxwell School of Citizenship and Public Affairs, Syracuse University, 2004.
7. C-K. Wong, "Measuring third world poverty by the international poverty fine: The case of reform China," Social Policy & Administration, Vol. 29, No. 3 (1995), pp. 189-203.
8. As Wong argues: "living in an affluent region of poor countries, the urban poor are in a better position than their rural compatriots in terms of command over social resources and opportunities for self-advancement ... In policy debates, therefore, the international poverty line could help to record the extent to which the poor share in the newly created economic wealth in the affluent region of some third world countries." Ibid. p. 191.
9. See B. Gustafsson and S. Li, "The structure of Chinese poverty, 1988," The Developing Economies, Vol. 36, No. 4 (1988), pp. 387-406
10. B. Gustafsson and Z. Wei, "How and why has poverty in China changed? A study based on microdata for 1988 and 1995," The China Quarterly, No. 164 (2000), pp. 983-1024
11. B. Gustafsson, S. Li and H. Sato, "Can a subjective poverty line be applied to China? Assessing poverty among urban residents in 1999," Journal of International Development, Vol. 16 (2004), pp. 1089-1107
12. and S. Li, "Changes in-poverty profile in China," Discussion Paper 2001/21, WIDER, United Nations University, Helsinki, 2001.
13. M. Ravallion, "Issues in measuring and modelling poverty," Economic Journal, Vol. 106 (1996), pp. 1328-43.
14. It is important to note that these differences imply that there is no single national poverty line, but a variety of different lines that vary with local conditions, even though they have been derived from a single framework (e.g. the cost of a subsistence basket of goods).
15. B. Li and D. Piachaud, "Poverty and inequality and social policy in China," CASEpaper 87, Centre for the Analysis of Social Exclusion, London School of Economics, 2004.
16. X. Meng, R.G. Gregory and Y. Wang, "Poverty, inequality, and growth in urban China, 1986-2000," Journal of Comparative Economics, Vol. 33, No. 4 (2005), pp. 710-29.
17. M. Ravallion and S. Chen, "China's (uneven) progress against poverty," mimeo, Development Research Group, World Bank, Washington DC, 2004.
18. Meng, Gregory and Wang, "Poverty, inequality, and growth."
19. A.R. Khan, "Growth, inequality and poverty. A comparative study of China's experience in the periods before and after the Asian crisis," mimeo, University of California, Riverside, 2004.
20. Gustafsson and Li, "The structure of Chinese poverty"
21. Gustafsson and Wei, "How and why has poverty in China changed?"
22. Li, "Changes in poverty profile," Table 13.
23. Gustafsson, Li and Sato, "Can a subjective poverty line be applied to China?"
24. Wong, "Measuring third world poverty by the international poverty line"
25. and C-K. Wong, "How many poor people in Shanghai today? The question of poverty and poverty measure," Issues & Studies, Vol. 33, No. 12 (1997), pp. 32-49.
26. For example, the subjective poverty lines (based on local community perceptions of how much is needed to make ends meet) used by Gustaffsson, Li and Sato vary (for a three-person household) from 3,642 RMB per month in Pingdingshan to 11,079 RMB per month in Beijing. Wong's (1997) estimated poverty line for Shanghai in 1996 set at 50% of median income is equal to 1,000 RMB per month.
27. Wong, "How many poor people in Shanghai today?" Table 4
28. Gustafsson, U and Sato, "Can a subjective poverty line be applied to China?" Tables 7(a) and (b).
29. P. Whiteford, "From enterprise protection to social protection: Pension reform in China," Global Social Policy, Vol. 3, No. 1 (2003), pp. 45-77.
30. An overview of China's recent pension reforms is provided in P. Saunders, "The role of state and family in the living conditions of older people in urban China: Changing attitudes and outcomes," Social Policy and Society, Vol. 5, No. 3 (2006), pp. 359-72.
31. Whiteford, "From enterprise protection to social protection"
32. J.M. Raymo and Y. Me, "Income of the urban elderly in postreform China: political capital, human capital, and the state," Social Science Research, Vol. 29, No. 1 (2000), pp. 1-24.
33. China Research Centre on Ageing, The Economic Situation of Older People, CRCA, Beijing, 2001
34. P. Saunders and L. Sun, "Pension reform in China: Imperatives, constraints and opportunities," in R. Smyth, O. K. Tam, M. Warner and C. J. Zhu (eds.), China's Business Reform. Institutional Challenges in a Globalized Economy (London: Routledge, 2005), pp. 157-76.
35. The 2000 survey includes many of the same questions that were asked in an earlier survey conducted in 1992. Aspects of the data collected in the earlier survey have been analysed by Y-J. Lee and A. Xiao, "Children's support for elderly parents in urban and rural China: results from a national survey," Journal of Gross-Cultural Cerontology, Vol. 13, No. 1 (1998), pp. 39-62
36. X. Pei and V.K. Pillai, "Old age support in China: The role of the state and the family," International Journal of Aging and Human Development, Vol. 49, No. 3 (1999), pp. 197-212
37. Raymo and Me, "Income of the urban elderly in postreform China."
38. This restriction explains why the poverty rates presented below differ from those estimated in other studies that include all older people.
39. An alternative approach involves setting spousal income equal to the mean reported income of older people living as couples of the same age, gender and city of residence. However, the two approaches produce similar poverty rates and so the former method has been used here, mainly because of its simplicity - see P. Saunders and L. Sun, "Poverty, hardship and isolation amongst the urban aged in China," Social Policy & Administration, Vol. 40, No. 2 (2006), pp. 138-57.
40. Z. Yi and L. George, "Extremely rapid ageing and the living arrangements of older persons; the case of China," Population Division, Department of Economic and Social Affairs, United Nations, New York, 2000
41. X. Meng and C. Luo, "What determines the living arrangements of the elderly in urban China?" mimeo, Department of Economics, Research School of Pacific and Asian Studies, Australian National University, Canberra, 2004
42. Saunders and Sun, "Pension reform in China." Meng and Luo estimate that 37.1% of the urban elderly were living by themselves (including with their spouse), which is similar to the estimate of 39.8% derived by Saunders and Sun.
43. See Meng and Luo, "What determines the living arrangements of the elderly," Table 3. A separate analysis of data from the China Urban Labour Market Survey shows that transfers to parents are three times higher for those who have an older person living in the household than for those who do not.
44. See F. Cai, J. Giles and X. Meng, "Demographic change, traditional family values and pension reform in China," mimeo, School of Asian and Pacific Studies, Australian National University, Canberra, 2003. This reinforces the finding that older people who live by themselves have higher incomes than those who live with others, making this group a better basis for the comparisons presented later.
45. The data for the other countries included in the comparisons have also been restricted to those who live alone or with their spouse, although this has a far smaller impact than in China because most aged people in industrial countries five by themselves. However, since the freedom to be able to live alone in old age is a direct result of the higher standards of living associated with economic development, it would be incongruent to incorporate one consequence of such development (the higher income it generates) without also including the other (the increased freedom to choose to live alone).
46. T.M. Smeeding, M. O'Higgins and L. Rainwater, Poverty, Inequality and Income Distribution in Comparative Perspective. The Luxembourg Income Study (London: Harvester Wheatsheaf, 1990).
47. See, for example M. Sawyer, Income Distribution in OECD Countries, OECD Occational Studies, OECD, Paris, 1976.
48. A.B. Atkinson, "The Luxembourg Income Study (LIS): Past, present and future," Socio-Economic Review, Vol. 2, No. 4 (2004), pp. 165-90.
49. T.M. Smeeding and A. Grodner, "Changing income inequality in OECD countries: Updated results from the Luxembourg Income Study (LIS)," in R. Hauser and I. Becker (eds.), The Personal Distribution of Income in an International Perspective (Berlin: Springer-Verlag, 2000), p. 211.
50. Further information about how to gain access to the LIS data is provided on the LIS website at: www.lisproject.org from where the LIS Working Papers can be downloaded.
51. A.B. Atkinson, L. Rainwater and T.M. Smeeding, Income Distribution in OECD Countries: The Evidence from the Luxembourg Income Study (LIS), OECD, Paris, 1995
52. United Nations Development Program, Human Development Report 2003. Millenium Development Goals: A Compact Among Nations to End Human Poverty, UNDP, New York, 2003.
53. Smeeding and Grodner, "Changing income inequality in OECD countries"
54. and P. Saunders, H. Stott and G. Hobbes, "Income inequality in Australia and New Zealand: International comparisons and recent trends," Review of Income and Wealth, Vol. 37 (1993), pp. 63-79.
55. T.M. Smeeding and P. Saunders, "How do the elderly in Taiwan fare cross-nationally? Evidence from the Luxembourg Income Study (LIS) project," in S-C. Hu et al. (eds.) Emerging Social Economic Welfare Programs for Aging in Taiwan in a World Context (Academia Sinica, 1999), pp. 205-37 provide a series of comparisons of the circumstances of older people in Taiwan (which had not joined the LIS project at that stage).
56. Gustafsson and Li, "The structure of Chinese poverty" used a poverty line tied to median income to estimate relative poverty in China, although their results demonstrate that because of the highly skewed nature of the national income distribution in China, poverty ends up being almost totally dominated by those living in rural areas. For example, they estimate that only 0.36% of the urban population had incomes below a poverty line set at one-half of median national household income, whereas the rural poverty rate measured on the same basis was 17.57%. This provides another reason for restricting the analysis to urban China.
57. A.B. Atkinson, "How should we measure poverty? Some conceptual issues," in A. B. Atkinson, Poverty and Social Security (London: Harvester Wheatsheaf, 1989), pp. 7-24.
58. Gustafsson and Li, "The structure of Chinese poverty," Table III.
59. The equivalence factor α is assumed to be between zero and one, where the closer it is to one the lower the economies of scale within the household. The common practice of using per capita income in studies of poverty in developing countries implies that α = 1. In contrast, Buhmann et al. suggest that estimates of the parameter α in industrial countries suggest that the value there is around 0.55. B. Buhmann, L. Rainwater, G. Schmaus and T.M. Smeoding, "Equivalence scales, well-being, inequality and poverty: Sensitivity estimates across ten countries using the Luxembourg Income Study (LIS) database," Review of Income and Wealth, Vol. 34 (1988), pp. 115-42.
60. The equivalence scale estimated by Gustafsson and Li, "The structure of Chinese poverty" refers to consumption net of housing and a separate scale is available to adjust housing expenses. However, many older people have low housing costs and the use of the restricted scale is unlikely to produce any major inaccuracies.
61. The estimates for 2002 were back-dated to 2000 by deflating by the movement in an index of the per capita annual net income of city households derived from the China Statistical Yearbook, 2003 and the poverty line has been set at one-half of the deflated figures. The author acknowledges the assistance provided by Li Shi in providing this information.
62. An exception is the study by Gustafsson, Li and Sato that focuses on disposable income, defined as equal to household expenses after the deduction of expenditure on health care and education.
63. This example illustrates how sensitive poverty estimates are to the choice of equivalence scale. Further analysis of this issue is provided by Buhmann et al., "Equivalence scales, well-being, inequality and poverty"
64. and Atkinson, Rainwater and Smeeding, Income Distribution in OECD Countries.
65. It should be noted that the estimates in Tables 1 and 2 for all countries other than China cover those living in both urban and rural areas, whereas those for China cover only those living in urban areas.
66. Thus, the equivalence scale used here implies that a couple requires an income equal to 1.85 times that of a single person to achieve the same living standard. In contrast, using the LIS square root scale, this relativity is much lower, at 1.41.
67. Saunders and Sun, "Poverty, hardship and isolation."
68. The 50% of mean income poverty fine is close to 60% of median income, the benchmark that is now commonly used to estimate income poverty in Europe. See, for example, A.B. Atkinson, B. Cantillon, E. Marlier and B. Nolan, Social Indicators. The EU and Social Inclusion (Oxford: Oxford University Press, 2002).
69. The results in Table 1 include many people aged 60 to 65 who do not qualify for the pension but who may be unemployed, disabled or otherwise unable to get work and thus fall into poverty.
70. See Bonoli, The Politics of Pension Reform.
71. See S. Li, "New findings in income inequality in China at the beginning of the new millennium," presented to the USC 40th Anniversary Conference, Hong Kong, 2004
72. H. Wenxiu, "The evolution of income distribution disparities in China since the reform and opening-up, " in Income Disparities in China. An OECD Perspective, OECD, Paris, 2004, pp. 9-25.