How Effective Are Public Safety Net Programs in Reducing Poverty Risks? a Comparative Study of Taiwan and Southeast China

Over the past few decades, East Asia has experienced rapid demographic, economic, political, and social transformations that have resulted in new patterns of poverty and have altered the strengths of public and private safety nets. Key questions about these transformations remain: What were the patterns of poverty entry and exit? What were the individual and structural determinants of poverty entry and exit? How well did the evolving public safety nets buffer poverty risks? This study focuses on Southeast China and Taiwan to answer these important questions from a comparative perspective.

Comparative research on poverty offers crucial insights into the patterns of poverty across different contexts and into the effectiveness of alternative policy responses. Poverty dynamics research allows policymakers to understand when people enter into or exit poverty and what factors trigger these transitions. This information can help with the design and evaluation of poverty alleviation policies. Although there is a body of literature on comparative poverty dynamics, East Asian countries have been precluded from these investigations due to the lack of comparable longitudinal data for comparative studies on poverty dynamics.

This study will be the first to use the cross-nationally harmonized Panel Study on Family Dynamics (PSFD), covering both Taiwan and Southeast China (Fujian, Zhejiang and Shanghai) in 2006–2013, to examine the patterns and determinants of poverty dynamics. This study first uses sequence analyses and multilevel models to depict the trends in poverty entry and exit across the time and space. To understand the extent to which public safety net programs helped reduce poverty risks, we compare the poverty trends across Taiwan, urban and rural Southeast China before and after public transfers to estimate and contrast their impacts. Findings from this study can inform the evaluations of poverty alleviation policies in Taiwan and mainland China in responding to the changing demographic and economic trends.

Preliminary findings show that risks of ever being in poverty were the highest among respondents with rural Hukou in Southeast China, followed by those with urban Hukou and then Taiwan. Welfare programs alleviated risks of persistent poverty as well as poverty entry and provided opportunities for poverty exit in both Taiwan and southeast China, to a greater extent in Taiwan than in southeast China. Despite the tremendous progress in economic development in southeast China and the expansion in public safety net programs in both rural and urban China during the study period, their post-transfer poverty risks were still higher than Taiwan, a place that shows a stagnation in economic growth and welfare expansion. Continued improvement and expansion on welfare systems is imperative in alleviating poverty risks in both contexts.