Effectiveness of social welfare programmes on poverty reduction and income inequality in China

Using the 1989 and 2009 China Health and Nutrition Surveys, this paper examines the effects of social welfare programmes on poverty and income inequality in China in 1989 and 2009. The findings indicate that social welfare programmes have played an important role in poverty reduction, reducing poverty rates by approximately 32%. The effects on income inequality, however, were reversed. For example, the ratio of top to bottom income quintiles grew after government transfers, suggesting that the programmes benefitted higher income families more than their counterparts. The inequalities among regions and income quintiles also increased over time.