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The Growth of Poor Children in China 1991-2000: Why Food Subsidies May Matter

The Growth of Poor Children in China 1991-2000: Why Food Subsidies May Matter. Lars Osberg Jiaping Shao Kuan Xu Economics Department Dalhousie University UNU-WIDER Conference Advancing Health Equity 29-30 September 2006 Helsinki, Finland. The paper in one slide.

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The Growth of Poor Children in China 1991-2000: Why Food Subsidies May Matter

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  1. The Growth of Poor Children in China 1991-2000:Why Food Subsidies May Matter Lars Osberg Jiaping Shao Kuan Xu Economics Department Dalhousie University UNU-WIDER Conference Advancing Health Equity 29-30 September 2006 Helsinki, Finland

  2. The paper in one slide • China – 1991 – 2000 • Rapid growth in inequality & average income • Increased Average Height-for-Age children 2-13 • Elimination of food subsidies after 1995 • Little increase in height of disadvantaged kids • Does income poverty now matter more for child development in China? • Robust OLS & quantile regressions on panel data • Poverty status & growth in height-for-age • Not significant in 1991-1993 • Significant negative impact 1997-2000 • General moral: Food subsidization may play an important social protection role for child well-being and development

  3. China Health and Nutrition Survey (CHNS) • Micro-data collected in 1989, 1991, 1993, 1997 and 2000 • Surveys conducted by the Carolina Population Center at the University of North Carolina • Follows a panel of about 16,000 individuals in 4,400 households in 9 provinces • Incredible level of detail • 1991 – 2000 data used • Children aged 2 to 13 • <2 – variable height + measurement error • >13 – variability due to puberty onset • documentation available at http://www.cpc.unc.edu/china

  4. Survey Provinces

  5. GDP per capita in China 1980 =$763 2004 = $5,419 1991-2000 annual real growth rate of per capita GDP = 9.2 % 1991 = $ 1,721 2000 = $ 3,928 World Bank GDP per capita, PPP (constant 2000 international $) 2006 = 10.9% GDP growth Gini index of inequality in money incomes China 0.345 in 1991 0.407 in 2000. Canada 0.281 to 0.302 USA 0.338 to 0.368 Netherlands 0.266 to 0.248 Switzerland 0.309 to 0.280 Context: Very Rapid Growth in GDP Per Capita & Inequality in China

  6. Overall Income Distribution Shifts Up – Lower Tail Stays

  7. Issue: Well-Being & Growth ?? • Rising Inequality in Cash Income in China + Money Matters More • Social Policy Changes • Marketization • Elimination of food subsidies • Loss of employment guarantees • Loss of health care coverage • Are the poor absolutely worse off? • Meng, Gregory and Wang (2005) • Does poverty affect health of poor kids?

  8. HAZi=(height child i – median height same sex & age) (standard deviation of height - same age & sex) • “good indicator underlying health status” • slow height growth correlates with: • perform less well in school • score poorly on tests of cognitive function • poorer psychomotor skills & fine motor skills • lower activity levels • interact less frequently in their environments • fail to acquire skills at normal rates Mansuri (2006:3) • HAZi < -2 = “stunted” • HAZi < -3 = “severely malnourished” • Indicator of most basic of Sen’s “Capabilities” • to attain normal physical & cognitive development

  9. Chinese Children are taller on average- Height as % of CDC Norm Age 2 -18

  10. Change of average height-for-age (HAZ) by decile 1991 to 2000 (age 2-13)

  11. Stagnation in % children who are “Severely Malnourished” [HAZi < -3] ? [1991: n=1659; 1993: n=1390;1997:n=1123; 2000:n=813]

  12. Income Growth + Social Policy Reform • Rapid growth in GDP in China accompanied by structural reforms • Employment security • Housing • Food subsidies • Relatively more important for low income households • “Even though income growth reduces poverty, the radical reform measures implemented in the 1990s have sufficiently offset this gain that urban poverty is higher in 2000 than in 1986.” • Meng, Gregory and Wang (2005)

  13. Social Protection in 1991 and 2000

  14. Value of Food Coupons, 1991 [$2 PPPpoverty line = 1072 Yuan; ½ Median = 597 Yuan]

  15. Does income poverty now matter more for child development in China? • Loss of food subsidy has removed buffer to impact of income shocks • China – special factors • “One child” policy means family resources are concentrated • Very rapid growth in most people’s incomes • HAZireflects accumulation of all past health & nutrition • Including any long-ago food subsidies • ∆ HAZi– is current growth influenced by current income shocks ?

  16. Panel OLS 1991-2000; 2-4 become 11-13Poverty line=$2 / day ; very small sample

  17. Estimates from panel – Robust OLS – Early and late 1990s compared • Poverty line = $2 / day / per capita • Controls for tap water, region • Larger sample • 2 to 11 in 1991 were 4 to 13 in 1993 • 2 to 10 in 1997 were 5 to 13 in 2000 • Poverty status • insignificant in 1991 & 1993 • Statistically significant & negative in 1997 & 2000 • Same results if ½ median poverty line • Either national median or rural/urban separately

  18. OLS – presumes common impact of RHS variables on conditional mean • OLS – choose β to minimize sum squared residuals • Implies: outliers acquire greatest weight • Presumes: symmetric loss function for errors • Social important issue – stunting & deprivation • Child growth & development – arguably a different process for the stunted & for the thriving • Quantile regression • Estimates the differing determinants of outcomes at each point in the outcome distribution • Linear, asymmetric loss function

  19. Panel 1991-93 – Robust OLS & Quantile Regression Estimated Impact of Poverty on HAZi

  20. Panel 1997-2000 – Robust OLS & Quantile Regression Estimated Impact of Poverty on HAZi

  21. Quantile Regression Estimates • 1991 & 1993 • quantile point estimates vary relatively little & close to OLS estimates - i.e. β = 0 • nothing gained by using quantile regression • 1997 • fairly close to OLS β = -0.2(≠0 @ 95%) • 2000 • Increasingly large negative impact of poverty for larger HAZ • Poverty especially reduces the chances of substantial growth

  22. Caveats • China = 1.3 Billion people • HUGE diversity of circumstances • CHNS data – very fine BUT • Great Audacity would be required to generalize from 4,400 households in 9 provinces • Sample selection implies much smaller sample size for regressions reported here • N = 1278, 587, 129 • Simplest poverty measure used + 3 alternative poverty lines • Suggestive results NOT conclusive evidence – to be corroborated with larger data sets ??

  23. Possible Implications • Bottom decile of children aged 2-13 in China ≈ 13 million • Failure to keep up with increase in stature of other children matters 1: For future output, health & well-being 2: Because children are citizens NOW • General Moral? • Subsidies to basic food availability may play a crucial safety net role for child well-being • Historically important in OECD nations • Worth considering in Social Policy Reform in LDCs

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