The Study On Inequality And Poverty Of Ethnic Group Rural In The Southwest Of China

This report analyzes inequality and poverty within and between ethnic groups of rural villages in southwest of China, by using first hand household survey data and statistical and econometric tools. The data used is based on a survey of 322 households in Bulangshan township in Yunnan province in 2007. The emphasis of the paper is to research the inequality and poverty within and between different ethnic groups. This report will increase our knowledge about the inequity within and between ethnic groups in southwestern border areas and offers helpful reference to the government to establish or improve polices about reduce income inequality and poverty both between and within these groups.The overall conclusion of this paper is that the inequality and poverty between ethnic groups in rural village of southwestern areas is remarkable. The Gini coefficient is as high as 0.49 and the absolute poverty index is 5.7%. The major findings of this paper are as the followings: the farm income is still the major source of livelihood in this particular location and the accounts for the largest share of overall income inequality. The nonfarm income is a small share in the overall income. The activity"danfo"about religion is helpful in reducing to the income gap. The distribution of income is relatively even within the natural village, but there is big gap between the natural villages. There is remarkable income gap between the different ethnic groups, some minorities are very rich and some are very poor. The findings according the decomposition of income inequality by different population is as the follows: in the administrative village level, the variation within administrative village plays bigger role than the variation between the administrative villages in explaining overall inequality. On the contrary, in the natural village level, the variation between the natural villages plays bigger role than the variation within the natural villages in explaining overall inequality. In the minority level, the variation within the minority plays bigger role than the variation between the variation minorities in explaining overall inequality. By the Shapley value decomposition based on the regression, we found the land disparity is the most important in explanatory factor for observed inequality among farmers in southwest minority rural village areas. The physical capital is the second in explanatory factor for observed inequality and the human capital is the third explanatory factor for observed inequality, among the human capital, the drug using is 10% in explaining observed inequality. Using the poverty Probit model, the study shows that the drug using, poor physical capital, the ethnic group, the uneven land among the farmers are the major determinants of inequality in household income of southwestern ethnic rural villages.This dissertation suggests the following policy recommendations in order to reduce inequality and poverty in Southwestern rural minority areas. First, it is important for government to establish physical capital market to help the poor family with the needed physical capital. Second, the government should also invest in education in poor areas and poor family. Third, it is crucial to improve the level of farmers'income from diversification income source, for example migration to nonfarm sector or urban centers. In ethnic rural poor villages, it is necessary to establish compensational institutions for rural households to reduce income shocks because of the market risk. Considering the historical reason, some ethnic group for the southwest border China were in primitive society and some minorities and household are no self-disciplined and consciousness of household production and living; so the following measures should be taken. Rural households should establish the right relationship between saving and living expense. Second, Rural households should balance the spending on recreation/entertainment and spending on education and technology. Third, guide the rural household to shift passion of joining religion organization to the passion of joining economic organization.There are two innovative points in this paper. First is the focus of a clustering areas of minorities ,especial which are in primitive society in the early 1950`s, based on a census-type household survey data. third is its comprehensive consideration of factors like drug using, religion, in addition to traditional household and village variables like capital, labor in the econometrics model to analyse to the quantitative influence for the variables on the inequality and poverty of study areas.