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How Much Does the Neighborhood Effect Affect Individual Poverty?

【Authors】
XIE'E, SONG Yanqun
【WorkUnit】
Shandong University, 250100.
【Abstract】

The neighborhood effect is one of the main reasons for the long-term poverty of individuals and the concentration of poverty, so studying the neighborhood effect can help address the problem of poverty concentration in China. Based on the data of China Health and Nutrition Survey (CHNS) from 1989 to 2015, this paper examines the existence of neighborhood effect, calculates its influence on the probability of individual poverty, explores its long-term influence on individual poverty and its impact on the duration of individual poverty, and finally, estimates the contribution of the neighborhood effect to individual poverty, educational attainment and income differences. The results show that the neighborhood effect is significant and non-linear in China; a good neighborhood environment decreases the probability of individual poverty and increases the education level and income level; females and urban dwellers are more susceptible to the neighborhood effect; unobservable factors to some extent reinforce the neighborhood effect on individual poverty, education and income; the neighborhood effect has long-term influence on the probability of individual poverty and significant influence on the latter's duration; it could explain a quarter of the variation in poverty status between individuals and a fifth of the variation in education and income levels. Therefore, the neighborhood effect deserves our attention in the process of poverty alleviation.


JEL:H31, I21, I32

【KeyWords】
Neighborhood Effect, Poverty, Unobservable Factor, Long-term Effect