With Nong Zhu
Migrant workers have been contributing to one-sixth of China’s GDP growth since the mid 1980s. The impact of rural migrants’ contribution is best seen in cities during the Chinese New Year, when they return to reunite with their families, leaving behind a massive urban labor shortage. This happens every year despite urban families and restaurant owners offering high bonuses.
There is a consensus that migration has contributed to increased rural income, but views differ on its impact on rural inequality. My view is that rural households with higher incomes are not more likely than poorer households to participate in migration or benefit disproportionately from it. Adding to my recent blog in People Move, I would like to discuss the reasons behind this.
One is always grateful to see attention paid to the quality and quantity of household data available to study poverty. It is a subject dear to my heart and to my colleagues in the Living Standards Measurement Study (LSMS ) in the World Bank. In sub-Saharan Africa, as a recent Global Dashboard post titled “What do we really know about poverty and inequality?” by Claire Melamed points out, there is still a dearth of data, even after years of government effort and international support. But there are data -- in some countries lots of data -- so it’s worth highlighting what is there. Today I wanted to add some nuance to the discussion of income and assets raised by Claire and, probably more importantly, steer people to some new data that will, we hope, excite the most blasé of you out there.
OK, let’s put two blog posts in a pot and stir. In a previous post on measuring consumption, Jed gave us some food for thought, while over on Aid Thoughts, Matt is talking about how a respondent is seeing the enumerator on the sly to conceal land that he doesn’t want his wife to know about. Put it together, and what do you have?
with Nong Zhu.
In China, rural-to-urban migration and development of the rural non-farm sector strongly modified rural household income structure since the economic reform. In the mid 2000s, almost half of total rural income in China was from non-farm activities. Whether the decline in poverty was principally due to farm income growth or due to non-farm income growth and whether the rising share of non-farm income in total rural household income was the leading cause of the sharp increase in rural inequality have been key issues of debate.
In his Inquiry into the Nature And Causes of the Wealth of Nations Adam Smith pointed to the social-inclusion role of a linen shirt in 18th century Europe:
“A linen shirt … is, strictly speaking, not a necessary of life. The Greeks and Romans lived, I suppose, very comfortably though they had no linen. But in the present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty which, it is presumed, nobody can well fall into without extreme bad conduct.”
This passage has often been used to justify the view that poverty is not absolute but relative—that certain socially-specific expenditures are essential for social inclusion, on top of basic needs for nutrition and physical survival.
The way this idea is implemented in practice is to set a “relative poverty line” that is a constant proportion of average income for the country and date in question. That is how poverty is measured in most of Western Europe. By contrast, poverty measures in developing countries have almost invariably used absolute lines, which aim to have a fixed real value over time. The World Bank’s international “$1 a day” poverty lines also aim to be absolute lines across countries, using purchasing power parities from the International Comparison Program.
Otaviano Canuto writes about the Food Price Watch today on the the Growth and Crisis blog.
“According to the World Bank’s Food Price Watch, a brief just released tracking food prices and poverty trends, global food prices are 36% above their levels a year ago and remain volatile, close to their 2008 peak. Key staples going through the roof include maize (74%), wheat (69%), soybeans (36%) and sugar (21%)...For some of us, expensive food might mean we spend more money in the supermarket, but for millions of people around the world, it is a real threat. The poor spend most of their money on food. So think about Mexicans, whose daily diet includes a good amount of tortillas. Or a family in Mauritania trying to get enough bread amid the 40% wheat price increase of the last year.”
Back home in the KBK districts of Orissa, the head of the household that for decades has worked with my family, fell ill recently. He is in his early 50s. His legs have stopped functioning normally. There have been similar cases before, and some got partially cured when they were taken to a doctor in Raipur, a city some 150 miles away. The family wants to take the patient to the same doctor. But that would cost a lot. They need cash. Urgently. They are considering approaching a local money lender in exchange for a mortgage on their meager ancestral land.
World Water Day was one of the more exciting days I've had since I started working at the World Bank. We had a very special guest, Hillary Clinton, the US Secretary of State, come by to talk about water.
Our villages are bread baskets – the primary region where most of the world's food is grown. Ironically, they are also home to many of the 1 billion who live in chronic hunger.