ABSTRACT
The issue of vulnerability has become a prominent study for poverty researchers (Dercon, 2001; Mansuri and Healy, 2000; Wood, 2003), in particular in developing and transitional countries like China. In this chapter, regional income vulnerability is defined as the risk of events in which a bad outcome could move the household into poverty on a regional level.1 This approach aims to identify which regions are more vulnerable than others. The operationalization of this definition involves the estimation of vulnerability with average household expenditure at the provincial level, and the explanatory factors involve the Theil inequality index of the composition of various assets (liquid assets, human capital and health care). The objective of this research is to analyze the composition of assets in China as well to present the evolution of vulnerability by region. This is done by using provincial-level data from 1985-2001. By presenting a methodology to estimate the evolution of vulnerability, this chapter provides a new perspective on poverty and aims to contribute to the development of a harmonious society in China.
