Di Bao: A Guaranteed Minimum Income in Urban China?

45 Pages Posted: 13 Jan 2006

See all articles by Shaohua Chen

Shaohua Chen

World Bank; World Bank - Development Research Group (DECRG)

Martin Ravallion

Georgetown University

Youjuan Wang

National Bureau of Statistics of China (NBS)

Date Written: January 2006

Abstract

Concerns about incentives and targeting naturally arise when cash transfers are used to fight poverty. The authors address these concerns in the context of China's Di Bao program, which uses means-tested transfers to try to assure that no registered urban resident has an income below a stipulated poverty line. There is little sign in the data of poverty traps due to high benefit withdrawal rates. Targeting performance is excellent by various measures. Di Bao appears to be better targeted than any other program in the developing world. However, all but one measure of targeting performance is found to be uninformative, or even deceptive, about impacts on poverty. The authors find that the majority of the poor are not receiving help, even with a generous allowance for measurement errors. While on paper, Di Bao would eliminate urban poverty, it falls well short of that ideal in practice.

Keywords: Urban poverty, cash transfers, behavioral responses, targeting, China

JEL Classification: I38, O15

Suggested Citation

Chen, Shaohua and Ravallion, Martin and Wang, Youjuan, Di Bao: A Guaranteed Minimum Income in Urban China? (January 2006). World Bank Policy Research Working Paper No. 3805, Available at SSRN: https://ssrn.com/abstract=875459

Shaohua Chen (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Martin Ravallion

Georgetown University ( email )

Washington, DC 20057
United States

Youjuan Wang

National Bureau of Statistics of China (NBS)

No. 75, Yuetan Nanjie
Sanlihe, Xicheng District
Beijing 100826
China

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