(WITHDRAWN) Social Assistance and Household Consumption in Urban China: From 2002 to 2013

Background and Purpose:Since the setup of China’s first urban Minimum Livelihood Guarantee (Dibao) in 1999, an unconditional cash transfer program that aimed to cover basic needs for the poor, the program has been establishing for more than 20 years. Little research studies the effects of urban Dibao on consumption patterns, which is an important perspective helping understand whether social assistance groups efficiently support recipients’ living standard. During the process of development, urban Dibao system has been experiencing significant changes, which may lead to the changes in the impact of urban Dibao. By now, none research studies the changes in the impact of urban Dibao on consumption across years. This research aims to study how urban Dibao affects family expenditure patterns and investigate the changes in the impact of urban Dibao on family consumption from 2002 to 2013.

Methods: The China Household Income Project (CHIP) 2013 urban dataset is used for this study. The sample of CHIP 2013 urban data involves 6,205 households, among which, 230 households (3.71%) received Dibao transfers in 2013. All consumption is measured in household expenditure per capita. Consumption categories include meeting survival needs (i.e., food, housing, facility and services, and transportation and communication), human capital investments (i.e. education and health), leisure (i.e. entertainment and cultural activities), and miscellaneous (i.e. other goods and services).

This study first estimates the propensity score of receiving urban Dibao benefits. Next, ordinary least squares regressions are performed to evaluate the effects of urban Dibao receipt on consumption patterns after matching Dibao recipients and non-recipients among the full sample. We also compare with findings from previous research studying the same topic but using CHIP 2002 and 2007 to examine the changes in the impact of urban Dibao on household consumption patterns from 2002 to 2013.

Results:Results reveal that urban Dibao recipients prioritized spending on education and health compared to their non-recipient counterparts. In addition, Dibao receipt was found to be associated with decreased consumption in making ends meet and social participation. Comparing these findings with those focusing on the same topic but using CHIP 2002 and 2007 data, we find that the positive association between urban Dibao receipt and household total consumption was statistically significant in 2002 and 2007, but became nonsignficant in 2013. Across all three years, urban Dibao remained its significant association with increased expenditures on education and health, two forms of important human capital investments.

Conclusions and Implications: This study provides evidences to show that urban Dibao increases recipients’ human capital investments, which plays a significant role in breaking the vicious cycle of intergenerational poverty. However, the declined expenditure in making ends meet and social activity participation suggest that Dibao recipients might live in a minimum standard of livelihood. Research for investigating whether Dibao recipients have sufficient standard of living is needed. Potential factors that contribute to the changes include: the evolution of urban poverty, the changing population coverage of urban Dibao system, and a series of social welfare reforms in the fields of education and health.