Rural Poverty and Ethnicity in China

In this paper I investigate the nature of the differential in poverty by ethnicity in rural China using data from the Chinese Household Income Project (CHIP). For that, I use counterfactual distributions (Firpo, Fortin and Lemieux, 2009; Yun, 2004) in which disadvantaged minorities are given a set of relevant characteristics of the Han majority. Among these characteristics are the description of the geographical location, social attitudes, social capital, assets, demographics (sex, age, civil status, number of children) and education and labor attachment. The proposed technique allows for identifying the global contribution of these mentioned factors, as well as the individual contribution of each set of factors to the total observed gap in poverty. Preliminary results show that even the region of residence plays an important role in explaining the gap in poverty by ethnicity, contrary to what was suggested previously in the previous literature poverty would be higher if minoriti9es and Han had the same geographical distribution. It is mostly the higher number of children and the lower level of education what explains the ethnic poverty gap in the West of the country, and the fact that minorities live in least developed areas in the Central and Easter region.