Journal of Public Economics 101 (2013) 1–11

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Journal of Public Economics

journal homepage: www.elsevier.com/locate/jpube

Evaluating China's poverty alleviation program: A regression

discontinuity approach☆
Lingsheng Meng
Department of Economics, School of Economics and Management, Tsinghua University, Beijing 100084, China

a r t i c l e i n f o a b s t r a c t

Article history: This paper evaluates the impact of the 8-7 Plan, the second wave of China's poverty alleviation program, on
Received 10 January 2011 rural income growth at the county level over the program's disbursement period, from 1994 to 2000.
Received in revised form 5 February 2013 Program participation was largely determined by whether a county's pre-program income fell below a
Accepted 11 February 2013
given poverty line; hence, a regression discontinuity approach is employed to estimate the causal effects of
Available online 28 February 2013
the program. Using a panel data set, we find that the 8-7 Plan resulted in an approximately 38-percent
JEL classification:
increase in rural income for counties that were treated between 1994 and 2000. Our empirical results also
H43 suggest the important role of initial endowments in the path toward economic development.
H54 © 2013 Elsevier B.V. All rights reserved.
I38
O53

Keywords:
Poverty
Targeting
Investment
Growth
Impact evaluation
China

1. Introduction
Evidence from cross-country studies suggests that sustained
economic growth has typically been effective in reducing poverty
(Ravallion and Chen, 1997; Dollar and Kraay, 2002). However, broad-
based growth is not always the panacea for poverty (Morduch, 2000),
possibly because the impoverished people residing in certain regions
are unable to fully share the gains from aggregate high growth
(Ravallion and Jalan, 1999). As a response to concerns over the lagging
poor, public efforts in many countries have assumed the form of poor
area development programs to fight poverty. Despite the theoretical
underpinnings of pursued strategies, whether these programs worked
as intended remains unknown.
The current paper evaluates a large-scale poverty alleviation pro-
gram instituted by the Chinese government in 1994. Known as the
☆ I wish to thank Doug Almond, Loren Brandt, Hongbin Cai, Yuyu Chen, Shawn Cole,
Mark Duggan, Avi Ebenstein, John Ham, Chang-Tai Hsieh, Nancy Hugghebaert, Melissa
Kearney, Jeanne Lafortune, Elaine Liu, Christopher McKelvey, Peter Murrell, Albert
Park, Gerard Roland, Hui Wang, Binzhen Wu, Li-An Zhou, and seminar participants at
University of Maryland, China Summer Institute, CCER-NBER Conference at Peking Uni-
versity, Zhejiang University, Guanghua School of Management at Peking University for
helpful comments. I am grateful to Hongbin Li and Albert Park for their generosity with
data. Jieyu Xie provided excellent research assistance. All remaining errors are my own.
E-mail address: menglsh@sem.tsinghua.edu.cn.
8-7 Plan, the program aimed to promote local economic development
through targeted public investments in the form of subsidized credits,
earmarked budgetary grants, and “Food-for-Work” projects. The
program impressed in terms of scale and public outlay. In a bid to lift
majority of the remaining 80 million poor from poverty by 2000, the
program covered 592 counties, or 28% of all county-level administrative
units in China. Over the course of its seven-year operation from 1994
to 2000, the program cost RMB 1240 billion (equivalent to USD
14.9 billion), an annual 5 to 7% of China's central government expendi-
tures (Wang, 2005).
Estimating program effectiveness is often complicated by the
nonrandomness of program placement (Ravallion, 2008). This problem
is especially relevant when public interventions are targeted based on
certain average individual characteristics. In the context of our study,
if untreated counties benefited more from aggregate economic growth
than treated counties due to geographic differences, a “naive” com-
parison of income gains can lead to an underestimation of the program
effect. Program effect can be overstated as well if those selected into the
program had experienced adverse shocks prior to eligibility, relative to
those who were not selected.
In this paper, we implement a regression discontinuity (RD)
approach to deal with the issue of nonrandom program placement.
One distinctive feature of the 8-7 Plan is that poverty assignment
was based on an identifiable indicator, specifically whether the pre-

0047-2727/$ – see front matter © 2013 Elsevier B.V. All rights reserved.
http://dx.doi.org/10.1016/j.jpubeco.2013.02.004
2 L. Meng / Journal of Public Economics 101 (2013) 1–11
program rural income per capita was below the poverty line. As such,
the causal impacts of the program can be gauged by comparing the
counties just below the dividing line to the counties just above it.
Empirically, we use the discontinuity of the program assignment at
the eligibility threshold to construct an instrumental variable for
actual treatment status. 1
Employing a panel data set of roughly 1700 Chinese counties over
20 years, our two-stage least squares estimates reveal that the 8-7
Plan produced a sizeable positive impact on rural income growth. We
estimate that the program has increased per capita income by approxi-
mately 38% (or 0.96 standard deviation) during the program period of
1994 to 2000. According to our estimates, the rate of return on poverty
investments was 42% during the program's disbursement period. Our
estimate is considerably larger than a conventional difference-in-
differences (DD) estimation, which tends to be biased. Downward
bias in the “conventional” estimates indirectly reveals the significant
role of initial conditions in subsequent economic development.
Importantly, estimates of the program effects from our design are
robust across a variety of specifications. These estimates are insensitive
to the inclusion of various control variables and different functional
form choices. Moreover, estimates are insensitive to the exclusion of
observations far away from the cutoff point. Finally, we demonstrate
that our results are unlikely to be driven by discontinuities in pre-
program county characteristics or endogenous sorting around the
threshold.
To explore whether the program has a persistent effect, we examine
income gains three years after the program ended. Estimates of
program effect in a “longer run” are smaller in magnitude. This finding
indicates that the program may have had only sizeable short-run effects
that began to decay just a few years after its implementation.
Our paper is closely associated with prior literature studying China's
poverty programs. The 8-7 Plan was pre-dated by the first wave of
China's poverty program, which is highly similar in content but smaller
in scale. Modest literature evaluating first-wave interventions suggests
that the program was successful in raising income and consumption of
people residing in poor counties (Jalan and Ravallion, 1998; Rozelle
et al., 1998; Park et al., 2002). As an aside, Park et al. (2002) likewise
examine the performance of the 8-7 Plan after its first full year of imple-
mentation by employing the DD approach. As an interim evaluation, the
DD approach observes that the program increased per capita income
growth by 0.91% during the 1992 to 1995 period. Despite the impor-
tance of China's 8-7 Plan, the work of Park et al. (2002) remains the
only study to date that assesses the effectiveness of the program.
Given that the new wave of the program was not effective until 1994,
an estimate of the longer-term impact is needed to assess the program's
overall efficacy.
Our empirical findings have important policy implications. First, as
the most populous developing country, China's success against poverty
has played a major role in the marked decline in the global poverty rate
since the early 1980s (Chen and Ravallion, 2010). Our empirical
findings indicate that China's publicly funded poverty alleviation pro-
grams had very important contributions to this trend. Second, impor-
tant lessons for the rest of the developing world can be gleaned from
China's poverty reduction efforts. Our analysis reveals that in a setting
where poverty is closely related to geography, gains from area-specific
interventions to reduce poverty can be substantial, at least within its
disbursement period.2 Third, our results echo earlier research that
surmised the limited long-term effectiveness of this type of poor-area
programs (Chen et al., 2009).
1
Our identification strategy is similar to an evaluation of Head Start program in the
United States (Ludwig and Miller, 2007). Using the discontinuity in program funding
across counties, Ludwig and Miller (2007) showed that the program has led to a sub-
stantial decline in child mortality and improved educational attainment.
2 3
Needless to say, the geographically targeted program is unlikely to benefit the poor
in areas not covered, and there may be leakage to the non-poor in designated poor
areas (Park et al., 2002).
Our paper has a few caveats. First, we are unable to identify the exact
mechanisms of how the program works. The program simultaneously
has three different types of interventions. However, the current data
set does not permit us to identify their effects separately. Second, the es-
timated return may still be biased, and the direction of bias is unclear.
On one hand, our results may overstate the rate of return on poverty
investments for non-econometric reasons, such as unobserved adminis-
trative costs and subsidized loan defaults. On the other hand, our results
may also understate the rate of return if the 8-7 Plan crowds out other
government spending.
The remainder of the current research proceeds as follows.
Section 2 provides background information on poverty in China and
the poverty alleviation program. Section 3 illustrates our empirical
strategy, and Section 4 describes the data used. Section 5 reports
the empirical results, and Section 6 provides the conclusion.
2. Background
2.1. Poverty in China
In China, poverty is closely linked to geography (Ravallion and Jalan,
1999). There is a marked difference between rural and urban areas,
with existing evidence pointing toward poverty being mainly a rural
phenomenon (World Bank, 2000). Moreover, greater differences in
the incidence of rural poverty exist between prosperous coastal areas
and less developed and most poverty-prone inland areas. Fig. 1 shows
the geographic distribution of rural poverty incidence in 1991 at the
provincial level. A province's shading indicates its rural poverty inci-
dence, in which darker shading represents higher incidence level. The
graph clearly shows the geographic concentration of poverty in inland
areas.
Two rounds of poverty reduction have been recorded since the
mid-1980s: the first round during 1986 to 1993, and the second
round during 1994 to 2000. Official statistics indicate that the poor pop-
ulation declined during the 1990s. Fig. 2 plots trends from 1990 to 2000
in the entire nation's official poverty headcount. Poverty reduction was
impressive over the given period, with both the size of poor population
and incidence of poverty experiencing a dramatic decline. The popula-
tion identified as poor decreased from 85 million in 1990 to 32 million
in 2000. As a share of rural population, poverty headcount fell from 9.5%
in 1990 to 3.4% in 2000.
2.2. First-round poverty alleviation program
In response to concerns over the lagging poor, the Chinese central
government launched an ambitious anti-poverty program in the
mid-1980s. The interministerial Leading Group for Poverty Reduction
(the Leading Group hereafter) was founded in 1986 to supervise and
coordinate the implementation of the entire program. Two features
distinguish the new program from prior poverty reduction efforts.
First, program assignment was based on a system of county-level
targeting. In recognition of the remarkably uneven distribution of
poverty across the country, the planner decided to use a targeting device
to disburse limited funds to areas with the greatest need. Second,
the newly adopted measures emphasized the promotion of economic
development. Unlike prior welfare and relief programs, the transfer
was not intended for direct consumption. Rather, resources were primar-
ily channeled toward economic development and revenue-generating
activities, which we elaborate below.
Priority ranking of counties is based on a statistic known as the rural
net income per capita.3 Every year, each county-level statistical agency
randomly selects approximately 100 rural households, and asks these
This approach is known as an indicator-based targeting, or statistical targeting,
which relies on certain key indicators to administer interventions (Besley and Kanbur,
1993).
 L. Meng / Journal of Public Economics 101 (2013) 1–11 3

Source: World Bank (2000)

Notes: Incidence of rural poverty is defined as the number of poor as a percentage of rural population.

Fig. 1. Incidence of rural poverty in 1991. Notes: Incidence of rural poverty is defined as the number of poor as a percentage of rural population.
Source: World Bank (2000).

samples to keep records of all their revenues and expenditures.
Subsequently, data are collected and aggregated to calculate county-
level rural net income per capita. This measure is one of the most
important official poverty statistics used by the Chinese government
in welfare assessment in rural areas and related policy making (Park
and Wang, 2001).
In 1986, the Leading Group initially identified 258 counties as
National Poor Counties according to a mixed set of poverty lines. In
100
general, counties with rural net income per capita below 150 yuan
were designated as poor. For political considerations, the poverty line
was raised to 200 for minority counties and 300 for “revolutionary
base” counties. In practice, however, explicit criteria for designation
were not strictly enforced. 4
Although the first-round designation captured a sizeable fraction of
the poor population, considerable criticism surrounded the approach
for program placement, which was heavily compromised by politics
(Park et al., 2002). In certain provinces, inclusion of politically favored
counties even crowded out counties below the mandated poverty line
(World Bank, 2000). Furthermore, researchers questioned the validity

14

of poverty lines used for designation.

12
Poor population (million)
80

2.3. Second-round program: 8-7 Plan

Percentage of poor
10

In response to criticisms, the Leading Group adopted a renewed

60

poverty line, according to which major revision was applied to the

National Poor Counties list in 1993. In principle, poor counties are those
6
40

with rural net income per capita below 400 yuan in 1992. However,
faced with pressure from previously designated counties, the central
4

government decided to raise the poverty line to 700 for counties labeled
20

as “poor” before 1993.5 In total, 592 counties were designated as National

2

Poor Counties, almost a third of all counties in China.

0

In Fig. 3, regions shaded in red show the designated counties,

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
clustering mostly in inland and mountainous areas. Compared to the
Year
previous wave of designation, the new list certainly performed better
Poor population (million) Percentage of poor

4
An additional 73 counties were added in the three years that ensued. For a detailed
Source: Park and Wang (2001) description of first-round designation, see Park et al. (2002).
5
It is worth noting here that the 1994 designation employed the 1992 data to assign
Fig. 2. National trends in China's official poverty headcount, 1990–2000. programs, and poverty lines were not made public until data collection was completed.
Source: Park and Wang (2001). This setting renders any precise sorting around the eligibility cutoff unlikely.
4 L. Meng / Journal of Public Economics 101 (2013) 1–11
Source: Heilig et al. (2006)
Notes: National Poor Counties designated in 1994 are denoted by regions shaded in red.
Fig. 3. Map of National Poor Counties (designated in1994). Notes: National Poor Counties designated in 1994 are denoted by regions shaded in red.
Source: Heilig et al. (2006).
in covering the poorest population. Government estimates suggest that
over 72% of the rural poor were residing in newly designated counties.
This second wave of designating poor counties in 1993 and the subse-
quent development assistance are likewise known as the 8-7 Plan. 6
Implementation of the entire project was supervised by the Leading
Group, headed by a top-ranking official. Aside from its massive spend-
ing, the central government attempted to meet its poverty reduction
goals by leveraging its unique personnel control system.7 In a meeting
in 1996, the central government stated clearly that it would reward or
punish local government officials according to their performance in
poverty alleviation. In particular, local officials would be demoted
should they fail to accomplish poverty reduction objectives set by the
central government.
The 8-7 Plan has three major interventions for poverty reduction.
First, targeted counties received credit assistance. The government
invested RMB 27.8 billion (1994 price) in the subsidized loan program
during the seven-year period of 1994 to 2000. Every year, funds for
loans were disbursed by the People's Bank of China (central bank) to
6
The program was called “8-7 Plan” because its main objective was to raise the ma-
jority of the remaining 80 million poor above the government's poverty line within
seven years.
7
For a review of China's personnel control system and empirical evidence of its in-
centive role in local economic development, see Li and Zhou (2005).
provincial Agricultural Banks of China (ABCs), which in turn made
allocations to their lower-level branches, following the scheme
established by the Leading Group. Final decisions to lend were made
jointly by county-level offices of the Leading Group and the ABC. The
subsidized annual interest rate was 2.88%. Before 1996, the bulk of
loans was channeled to rural enterprises rather than rural households;
priority of allocation switched back to households in 1996.
Second, the Ministry of Finance provided budgetary grants for
investment in poor counties. The funds, primarily managed through
the fiscal system, totaled RMB 12.5 billion (1994 price) over the
seven-year period. Upon approval by the Leading Group, the Ministry
of Finance made allocations to provincial departments of finance.
Provincial departments of finance then transmitted the funds to county
finance bureaus, which administered the final disbursements in cooper-
ation with the respective sectoral county government departments.
Majority of funds came in the form of Poor Area Development Funds,
which were used for productive construction projects. Other budgetary
grants were provided through earmarked grants for basic education,
health care, and soon.
Third, public employed projects (i.e., Food-for-Work) were
established in designated areas. The program sought to raise the
long-term development capacity of poor areas by supporting land
improvement and the construction of basic infrastructure, such as
roads and drinking water systems. The program likewise provided
 L. Meng / Journal of Public Economics 101 (2013) 1–11
short-term assistance to the poor by creating more jobs. The central
government distributed coupons to relevant local planning commis-
sions, which then used these to pay for physical inputs and labor
under the program. The central and provincial governments made
decisions on the types of investment, county governments selected
sites, and village committees were responsible for the allocation of
project investment and labor mobilization.
Although designated poor counties differ in the level of develop-
ment, all were treated with roughly the same intensity. In the following
analysis, we assume homogeneous treatment intensity and attempt
to estimate the collective impact of the whole bundle of interventions
received by the poor counties.
3. Empirical strategy
In this section, we lay out the econometric models employed to
estimate the program impact. With no random assignment, we can
assess the program effect using the DD framework, which examines
whether the income increases more among National Poor Counties
than among undesignated counties:
00 94 00 94
Δlog yi ¼ log yi −log yi ¼ α þ β⋅NP94i þ i −i ð1Þ
where Δ log yi is the change in log rural net income per capita in county
i from 1994 to 2000; NP94i is a binary indicator equal to one if county i
was designated as poor in 1994; β is the parameter of interest, which
measures the program impact; and it represents unobserved county-
level factors of county i in year t.
Consistent estimation of β using least squares requires E½NP94i ⋅
 distinct cutoffs as described in the Background section, we include
i −i Þ ¼ 0. If the omitted transitory factors that affect income
00 94
growth are simultaneously correlated with the National Poor County
status, then the DD approach will yield an inconsistent estimate of the
true parameter. In fact, poor and non-poor counties differ dramatically
in terms of local “initial conditions” such as geography. In particular,
non-poor counties mostly lie in coastal and less hilly areas, whereas
poor counties tend to be concentrated in remote upland areas. If
geographic disparities are important, non-poor counties are likely to
benefit more from the fast-growing economy than poor counties. In this
situation, a simple comparison of income gains in poor and non-poor
counties can lead to an underestimation of the program effect.8
The DD estimator can exaggerate the program's effectiveness as
well. Being designated as poor is partially driven by the transitory
shock i92. Suppose there is a certain transitory shock it that is serially
correlated. If the shock lingers on for two years but wears off almost
completely in eight years, a subsequent rise in yit + 8 among those treat-
ed is expected, even in the absence of a true program effect. 9 In addition,
the estimation of β is confounded by unobserved factors, such as change
in central leaders' preferences toward certain local leaders or areas,
which simultaneously affects the selection of poor counties and local
income growth (Park et al., 2002). All problems described above render
the DD estimator unattractive for our purpose.
By tying the decision of designation to certain poverty lines, the as-
signment rule for poverty programs in China creates a discrete relation-
ship between a county's pre-program performance (criteria variable)
and its probability of being treated (or propensity score). This condition
provides an opportunity to estimate the causal effects of poverty allevi-
ation program with the RD design (Hahn et al., 2001). The simplest
version of an RD design is known as the sharp design, where a deter-
ministic relationship exists between the treatment status and the
8 11
In a similar argument, Ravallion and Jalan (1999) point out that “geographic exter-
nalities” are a particularly significant source of bias in conventional evaluations of
poor-area programs.
9
This problem is analogous to that observed in the analysis of training programs, in
which participants are selected into treatment after experiencing a decline in pre-
program earnings (Ashenfelter, 1978).
5
selection variable (Lee, 2008). However, in many cases, the relationship
may be imperfect when the observed selection criterion is not strictly
followed. The administrator may rely on other factors to assign treat-
ment, but these additional variables may be unobserved by researchers.
In this case, assignment to treatment depends on the selection variable
in a stochastic manner, which is referred to as a fuzzy design.
Conceptualizing the RD approach in an instrumental variable (IV)
framework is useful in case of a fuzzy design (Angrist and Lavy, 1999;
van der Klaauw, 2002). In essence, we use the initial eligibility of the


program, Eligiblei ¼ 1 y92 i by , as an instrument for actual National
Poor County status, NP94i. 1(⋅) is an indicator function that is equal to
unity when the embraced statement is true, and y is the publicized
threshold of National Poor County (NP94) eligibility. Parametric first-
stage and reduced-form equations are as follows:
 
92
NP94i ¼ π0 þ π1 ⋅Eligiblei þ f yi þ ui ð2Þ
and
 
92
Δ log yi ¼ γ0 þ γ1 ⋅Eligiblei þ g yi þ vi ð3Þ
where f(⋅) and g(⋅) are smooth functions of the selection variable.
In practice, we model f(⋅) and g(⋅) as lower-order polynomials with
different slopes on two sides of the cutoff.10 π1 captures discontinuous
change in the propensity score at the cutoff; γ1 measures the relative
difference in outcome variable for counties above and below the cutoff.
In an exactly identified case like ours, the IV estimator, βIV, is simply the
ratio γ1/π1. As there are two different types of counties, which face two
county-type fixed-effects in our empirical model as well.
The key assumption for identification is that no discontinuity exists in
counterfactual outcomes at the critical cutoff. Moreover, as detailed
information on the implementation of individual counties is unavailable,
we have to assume that the program intensity is the same for every
county, and that the program impacts are homogeneous.
4. Data and descriptive evidence
In this paper, we use a county-level data set on 1946 Chinese
counties over 15 years (1981 to 1995) collected by the Ministry of
Agriculture (MOA).11 The data set contains important social and
economic variables of these counties, particularly rural net income per
capita, the variable used for program assignment, and welfare assess-
ment. We supplement the data set with economic variables for the
years 2000 and 2003 from various issues of the Yearbooks of Agricultural
Development Bank of China. Price deflators at the provincial level
are obtained from the China Compendium of Statistics 1949–2004. Our
major sample has approximately 1700 observations because of the
missing information on county-level income per capita for a few counties
in certain years. Descriptive statistics of the full sample are provided in
Table 1, and those for poor and non-poor counties are presented in
Table 2. Approximately 28% of counties were designated as National
Poor Counties in 1994, based on 1992 rural net income per capita
(current price).
Statistics reveal that the National Poor Counties are indeed consider-
ably poorer than non-poor counties before the program was introduced;
however, they have now outgrown non-poor counties. In 1994, average
10
Simple two-stage least squares (2SLS) implicitly assume that both functions are
approximated by polynomials of the same order.
During the period under consideration, there were roughly 2300 county-level re-
gions, excluding districts within prefecture-level cities. The MOA is an executive state
agency within the central government. This ministry has been using its own sampling
framework and survey instruments to collect household data since 1980. Considering
that the MOA is of a much higher rank than the county governments, influencing the
household survey is difficult for local officials.
6 L. Meng / Journal of Public Economics 101 (2013) 1–11

Table 1

1
Summary statistics.

National Poor County status

Variables Observations Mean Standard

.8
deviation

NP94 (National Poor County in 1994) 1946 0.28 0.45

1992 rural net income per capita 1946 646.81 292.18

.6
(current price)
1994 rural net income per capita 1796 1021.10 498.12
(1994 price)

.4
2000 rural net income per capita 1906 1717.67 820.77
(1994 price)
2003 rural net income per capita 1910 1920.69 948.10

.2
(1994 price)
Change in log income per capita 94–00 1758 0.52 0.40
Change in log income per capita 94–03 1761 0.64 0.39

0
National Poor County before 1994 1946 0.16 0.37
-500 0 500 1000 1500 2000
Minority county 1946 0.26 0.44
1992 Income per capita relative to cutoff
Revolutionary base 1946 0.10 0.29
Fraction with high school or more 1795 0.06 0.06
Notes: Each point represents the fraction of counties designated as poor within
Fraction with college or more 1795 0.004 0.016 20-yuan intervals of the 1992 income per capita relative to cutoff. The points are
weighted by the number of counties.
Notes: The major data set is collected by the Ministry of Agriculture. NP94 is an indicator
variable that is equal to one if the county was designated as a National Poor County in
1994. Fig. 4. Program placement. Notes: Each point represents the fraction of counties designated
as poor within 20-yuan intervals of the 1992 income per capita relative to cutoff. The points
are weighted by the number of counties.

per capita income of the non-poor counties was 84% higher than that of
the National Poor Counties. By 2003, however, the average per capita point (open circle) represents the fraction of counties designated as
income was only 51% higher, suggesting that poor counties grew faster poor within 20-yuan intervals of the 1992 income per capita relative
than non-poor ones during the program period. However, we cannot to cutoff. The figure presents dramatic evidence that there indeed
simply interpret the difference in growth rate as the causal effect of the exists a stark change in the probability of being treated around the
program, as treatment status was not randomly assigned. cutoff. Visually, probability of treatment is approximately 0.60 higher
Prior to presenting the formal regression results, we first provide a among the initially eligible counties.
number of graphical evidence of program designation. Fig. 4 plots Fig. 5 presents a plot of a county's change in log income per capita,
the first-stage relation between a county's 1992 per capita income the outcome of interest, against its income per capita (relative to the
relative to the cutoff and its probability of being treated. Each data eligibility cutoff in 1992), the running variable within a “±500 yuan”
window. Each circle is the average change in log income within
Table 2 25-yuan intervals of the running variable. The continuous line re-
County-level covariates by poor county status. presents the predicted values from a second order polynomial in the
running variable separately for observations above and below the
Variables Observations Mean Standard
deviation threshold. A discernible gap is evident in the predicted outcome at
the threshold when we compare counties that were barely eligible
National Poor Counties
1992 rural net income per capita 549 409.36 122.81
(e.g., income relative to cutoff is − 5 yuan) to those that were barely
(current price)
1994 rural net income per capita 491 634.20 212.46
1.25
Change in log income per capita 94-00

(1994 price)
2000 rural net income per capita 539 1259.65 568.37
(1994 price)
2003 rural net income per capita 539 1402.92 594.14
1

(1994 price)
Change in log income per capita 94–00 481 0.65 0.46
.75

Change in log income per capita 94–03 481 0.78 0.42

National Poor County before 1994 549 0.53 0.50
Minority county 549 0.44 0.50
Revolutionary base 549 0.16 0.37
.5

Fraction with high school or more 527 0.04 0.05

Fraction with college or more 527 0.003 0.007
.25

Non-National Poor Counties

1992 rural net income per capita 1397 740.12 286.59
(current price)
0

1994 rural net income per capita 1305 1166.66 497.02

-500 0 500
(1994 price)
1992 Income per capita relative to cutoff
2000 rural net income per capita 1367 1898.26 834.77
(1994 price) Notes: The continuous line is the predicted outcome from a regression that includes a
2003 rural net income per capita 1371 2124.25 983.35 second order polynomial in the running variable, and a dummy for observations above
(1994 price) the cutoff. Each point represents the average change in log income per capita 94-00
within 25-yuan intervals of the 1992 income per capita relative to cutoff. The points are
Change in log income per capita 94–00 1277 0.48 0.37
weighted by the number of counties.
Change in log income per capita 94–03 1280 0.59 0.37
National Poor County before 1994 1397 0.02 0.13
Fig. 5. Change in log income per capita by 1992 income per capita relative to cutoff.
Minority county 1397 0.19 0.39
Notes: The continuous line is the predicted outcome from a regression that includes
Revolutionary base 1397 0.07 0.25
a second order polynomial in the running variable, and a dummy for observations
Fraction with high school or more 1268 0.07 0.06
above the cutoff. Each point represents the average change in log income per capita
Fraction with college or more 1268 0.005 0.019
94–00 within 25-yuan intervals of the 1992 income per capita relative to cutoff.
Notes: The major data set is collected by the Ministry of Agriculture. The points are weighted by the number of counties.
 L. Meng / Journal of Public Economics 101 (2013) 1–11
ineligible (e.g., income relative to cutoff is 5 yuan). With a valid
regression discontinuity design, the two groups on average should
be similar in every respect, although they have different propensity
scores. 12 Therefore, the break of the fitted line at the cutoff is an
estimate of parameter π1 in Eq. (2) (without any adjustment of covari-
ates), equal to roughly 0.15.
The 8-7 Plan gives the National Poor Counties an explicit incentive
to strategically over-state their post-treatment income. If income in
the MOA data is reported by the local governments, our results may
actually reflect misreporting rather than real growth. To address
this concern, we use an alternative data set, the National Poverty
Monitoring Survey (NPMS), which is independently collected by the
National Bureau of Statistics (NBS) to check the quality of the MOA
data. The NBS is a national statistical agency that reports directly to
the state council and is therefore independent of the MOA. Each
year, the NPMS randomly selects 60 to 150 households in each poor
county. The sampled households are asked to keep accounts of their
monthly or quarterly incomes and expenses. The raw data are directly
submitted by the Rural Household Survey teams of the NBS to the
headquarters. The NPMS has its own measure of rural income per
capita in 2000 for the poor counties. By comparing income measures
from the MOA and NPMS for the poor counties, we find that the two
data sets are indeed independent. Furthermore, no systematic
overreporting of post-treatment income for the poor counties in the
MOA data is observed.
5. Results
In this section, we systematically test whether the poverty alleviation
program has a positive impact on rural income. Unless otherwise noted,
we use the Eicker–White robust standard errors for inference.
5.1. DD estimates
We first present the simple DD estimates (Eq. (1)) of the program
effect in Table 3 as a useful benchmark. The dependent variable is the
change in log income per capita from 1994 to 2000. Column (1) pro-
vides the unadjusted correlation between the dependent variable and
the designation status. Coefficient on treatment dummy is positive
and statistically significant at the one-percent level, suggesting that
the program is helping poor counties. Over the decade, designated
poor counties had an 18-percent gain in rural per capita income.
To examine whether the NP94 indicator has picked up any
cross-county variation along other dimensions, Column (2) intro-
duces into the regression a set of pre-program county-level variables.
After adjusting for covariates, the magnitude of the estimated pro-
gram effect decreases slightly but remains statistically significant.
Column (3) further includes provincial fixed-effects in the regression,
allowing only within-province comparisons of counties. This exercise
only leads to a marginal change in the size of the estimate. The
implied program effect is a 15-percent gain in per capita income.
Finally, we estimate a more flexible DD specification that includes
per capita income from 1990, 1991, and 1992. The results are shown
in Column (4) of Table 3. With the additional pre-treatment income
measures included, the coefficient of NP94 becomes very small and
statistically insignificant.
5.2. RD estimates
As discussed earlier, the first differencing approach is unable to
control for time-varying factors that affect both designation status
and income. To address this concern, we next implement the instru-
mental variable approach described in Section 3 to estimate the
12
We will test this assumption indirectly in the next section.
7
Table 3
Difference-in-differences results for 1994–2000 change in log income per capita.
Dependent variable: change in log income per
capita 94–00
(1) (2) (3) (4)
NP94 0.176*** 0.126*** 0.154*** 0.004
(0.023) (0.031) (0.031) (0.033)
Controls
County-level factors N Y Y Y
Provincial dummies N N Y Y
Pre-treatment income N N N Y
(1990, 1991 and 1992)
R2 0.04 0.07 0.16 0.24
Sample size 1758 1610 1610 1570
Notes: NP94 is an indicator variable that is equal to one if the county was designated as a
National Poor County in 1994. County-level controls include minority county indicator,
revolutionary base indicator, log population, log sown area per capita in 1990 and other
labor market measures calculated using the 1990 Population Census. All regressions con-
trol for county-type dummies. Huber–White standard errors are in parentheses. * denotes
statistical significance at the 10% level, ** at the 5% level, and *** at the 1% level.
program effects. We use the indicator of initial eligibility to instru-
ment for the actual designation status in 1994.
First-stage regressions (Eq. (2)) reported in Panel A of Table 4
suggest that initial eligibility, specifically per capita income relative
to the poverty line, is a very strong predictor of program designation.
Column (1) demonstrates results from the most parsimonious speci-
fication, where eligibility is the only regressor other than provincial
and county-type dummies. Coefficient on eligibility is highly signifi-
cant and large in magnitude, and the R 2 exceeds 0.60. Consistent
with graphical evidence, eligible counties, specifically those below
the official poverty line, have a significantly higher probability of
being designated. The size of this estimate remains substantial (greater
than 0.35) when a quadratic of the running variable and other controls
are included (Columns (2)–(4)). These results indicate that a 1992 per
capita income relative to the official poverty line is a strong predictor
of the actual treatment status.
Estimates of the reduced-form model (Eq. (3)) suggest that program
eligibility has a large impact on income. As shown in all four columns of
Panel B, eligibility coefficients are always positive and significant, at
least at the one-percent level. From a model with the richest set of
controls in Column (4), the estimated impact of eligibility is 14.4%,
equivalent to a 0.36 standard deviation of change in log income.
The IV estimates presented in Panel C show a large program impact
on rural income. The IV estimates are merely the ratio of reduced-form
coefficients (in Panel A) and first-stage estimates (in Panel B). The
estimate in Column (1) suggests a large effect when the selection vari-
able is not controlled for. As Column (2) includes the running variable,
the NP94 coefficient shrinks by approximately half of its size. Adding
a quadratic of the running variable slightly increases the size of the
estimate, as shown in Column (3). The coefficient is large in magnitude
and significant at the one-percent level. Finally, the estimate is largely
insensitive to include other county-level covariates (Column (4)).
The estimated coefficient of 0.384 implies that during the 1994 to
2000 period, the program raised rural income per capita by 38.4%
(0.96 standard deviation). Overall, the IV estimates for the program
effect are always significant and relatively stable across specifications.13
For our parametric estimates to be credible, identification of inter-
cept shift at the threshold should not rely solely on particular func-
tional forms of the running variable, or on data points in the
13
We combine the two RD thresholds into a single RD in our main specifications to
obtain reasonable statistical power. In Table 9, we present results for the two RD
thresholds separately. Both the first-stage and the reduced-form (and therefore the
2SLS) estimates are indeed different across the two groups. The 700-yuan threshold
sample produces no meaningful estimates due to a very limited sample size. The
2SLS estimate for the 400-yuan threshold is around 0.6, whereas the combined 400-
and 700-yuan threshold yields an estimate of around 0.4.
8 L. Meng / Journal of Public Economics 101 (2013) 1–11

Table 4 Table 5
First-stage, reduced-form, and 2SLS results for 94–00 change in log income per capita, 2SLS results for 94–00 change in log income per capita, using eligibility for NP94 as
using eligibility for NP94 as instrument. instrument.

(1) (2) (3) (4) Full sample ±1000 yuan ±500 yuan

Panel A: 1st-stage (dependent variable: NP94) (1) (2) (3) (4) (5) (6)
Eligible 0.642*** 0.539*** 0.358*** 0.377***
NP94 0.384*** 0.441* 0.443** 0.443 0.335 0.740
(0.034) (0.038) (0.052) (0.052)
2 (0.142) (0.262) (0.192) (0.397) (0.290) (0.749)
R 0.62 0.64 0.67 0.67
Polynomial terms 2 3 2 3 2 3
Sample size 1610 1610 1580 1580 1383 1383
Panel B: reduced-form (dependent variable: change in log income per capita 94–00)
Eligible 0.342*** 0.145*** 0.157*** 0.144*** Notes: The dependent variable is the 94–00 change in log income per capita. NP94 is an
(0.032) (0.036) (0.048) (0.048) indicator variable that is equal to one if the county was designated as a National Poor
R2 0.17 0.25 0.25 0.25 County in 1994. Eligible is an indicator variable that is equal to one if the county's 1994
rural net income per capita was below the poverty line. County-level controls include
Panel C: 2SLS (dependent variable: change in log income per capita 94–00) minority county indicator, revolutionary base indicator, log population, log sown area
NP94 0.533*** 0.269*** 0.439*** 0.384*** per capita in 1990 and other labor market measures calculated using the 1990 Popula-
(0.057) (0.071) (0.153) (0.142) tion Census. All regressions control for county-type and provincial dummies. Huber–
Notes on all panels White standard errors are in parentheses. * denotes statistical significance at the 10%
Running variable N Y Y Y level, ** at the 5% level, and *** at the 1% level.
Quadratic in running variable N N Y Y
Other county-level controls N N N Y
Sample size 1758 1758 1758 1610 was not phased out until 2000. Instead of assessing the program's
Notes: NP94 is an indicator variable that is equal to one if the county was designated as a
impact immediately after its implementation, we are now allowing
National Poor County in 1994. Eligible is an indicator variable that is equal to one if the for a three-year lag when constructing the growth measure. If the
county's 1994 rural net income per capita was below the poverty line. County-level program does have a persistent effect, estimates using this new out-
controls include minority county indicator, revolutionary base indicator, log population, come variable should be at least as large as those from the previous
log sown area per capita in 1990 and other labor market measures calculated using the
analysis for a shorter period.
1990 Population Census. All regressions control for county-type and provincial dummies.
Huber–White standard errors are in parentheses. * denotes statistical significance at the Table 6 repeats the exercise presented in Table 5, this time with
10% level, ** at the 5% level, and *** at the 1% level. longer-run growth measure as outcome of interest. Overall, the 2SLS
produces positive but unstable estimates for different specifications.
Compared to the results from the last table, estimated program impacts
extreme ends of distribution. To address this concern, we add higher on the income growth from 1994 to 2003 are slightly smaller in mag-
order polynomials and limit our sample within increasingly narrow nitude. These results, taken in conjunction with the “shorter-run”
intervals around the cutoff. Table 5 reports the results from these estimates from the previous table, indicate that the 8-7 Plan may have
exercises. For the purpose of comparison, Column (1) reproduces merely created a spurt in income that began to decay after only three
the results from Column (4) (Panel C in Table 4). In the next column, years.
a cubic term is included and the entire sample is used for estimation.
The parameter estimate is very similar to that from the previous spec- 5.4. Specification checks
ification. In the following two columns, we focus on counties within
1000 yuan of their respective cutoffs and experiment with different For our empirical strategy to be valid, poor and non-poor counties
functional forms. Our estimates appear robust to these changes. around the eligibility threshold should have similar pre-program
Columns (5) and (6) repeat the exercise with a “±500 yuan” window. trends in income growth. For a first robustness check, we use the
The estimated effects are comparable in magnitude, but no longer change in log income per capita from 1992 to 1994 as outcome of
statistically significant. Generally speaking, our estimates are largely interest (recall that the program was not introduced until 1994).
insensitive to the choice of functional forms and samples. 14 Without any differential trends between the treated and untreated
Following Lemieux and Milligan (2008), we estimate a linear close to the cutoff, the expectation is that the 2SLS estimates using
spline model for a successively narrower interval around the cutoff. eligibility as instrument for actual treatment should yield estimates
Table 10 shows RD estimates with varying window widths for the statistically insignificant from zero. The IV estimates of the program
first-stage, reduced-form and 2SLS regressions. All specifications con- effects on pre-program income growth are reported in Table 7. The
trol for the county-type dummy and the running variable with differ- structure of the table is similar to that of Tables 5 and 6, which dis-
ent slopes on each side of the discontinuity. Broadly speaking, the plays estimates from various specifications using different functional
results are fairly robust for window widths no smaller than ±300
yuan. As we narrow the window widths further below ±300 yuan, Table 6
the point estimates are more variable, but they remain positive 2SLS results for 94–03 change in log income per capita, using eligibility for NP94 as
and are generally consistent with the RD estimates based on larger instrument.
samples. Full sample ±1000 yuan ±500 yuan

(1) (2) (3) (4) (5) (6)

5.3. Lasting effect
NP94 0.280** 0.193 0.364** 0.079 0.108 0.054
(0.129) (0.233) (0.178) (0.339) (0.248) (0.523)
To determine if the program has a lasting effect on income growth, Polynomial terms 2 3 2 3 2 3
we use the change in log income per capita from 1994 to 2003 as the Sample size 1607 1607 1578 1578 1383 1383
outcome variable. Remember that the program under consideration
Notes: The dependent variable is the 94–03 change in log income per capita. NP94 is an
indicator variable that is equal to one if the county was designated as a National Poor
14
In a local average treatment effect setting such as ours, the estimated effects apply County in 1994. Eligible is an indicator variable that is equal to one if the county's
to a population of compliers around the cutoff: those counties that are treated when 1994 rural net income per capita was below the poverty line. County-level controls
they satisfy the cutoff rule, but would not otherwise be treated. Following Angrist include minority county indicator, revolutionary base indicator, log population, log sown
and Pischke (2009), and Almond and Doyle (2011), we calculate the implied means area per capita in 1990 and other labor market measures calculated using the 1990
of the complier characteristics. The compliers are quite similar to the population of Population Census. All regressions control for county-type and provincial dummies.
counties. Complier counties tend to have lower average educational attainment and Huber–White standard errors are in parentheses. * denotes statistical significance at the
more minorities. Other characteristics show much smaller differences. 10% level, ** at the 5% level, and *** at the 1% level.
 L. Meng / Journal of Public Economics 101 (2013) 1–11 9

Table 7 Table 9
2SLS results for 92–94 change in log income per capita, using eligibility for NP94 as First-stage, reduced-form, and 2SLS results for 94–00 change in log income per capita,
instrument. using eligibility for NP94 as instrument: separate results for two RD thresholds.

Full sample ±1000 yuan ±500 yuan (1) (2)

(1) (2) (3) (4) (5) (6) 700 yuan threshold 400 yuan threshold

NP94 0.011 −0.142 0.014 −0.098 0.078 −0.234 Panel A: 1st-stage (dependent variable: NP94)
(0061) (0.107) (0.081) (0.161) (0.133) (0.266) Eligible −0.061 0.333***
Polynomial terms 2 3 2 3 2 3 (0.226) (0.074)
2
Sample size 1610 1610 1580 1580 1383 1383 R 0.21 0.27

Notes: The dependent variable is the 92–94 change in log income per capita. NP94 is an
Panel B: reduced-form (dependent variable: change in log income per capita 94–00)
indicator variable that is equal to one if the county was designated as a National Poor
Eligible −0.134 0.209***
County in 1994. Eligible is an indicator variable that is equal to one if the county's 1994
(0.132) (0.064)
rural net income per capita was below the poverty line. County-level controls include 2
R 0.36 0.33
minority county indicator, revolutionary base indicator, log population, log sown area
per capita in 1990 and other labor market measure calculated using the 1990 Population
Panel C: 2SLS (dependent variable: change in log income per capita 94–00)
Census. All regressions control for county-type and provincial dummies. Huber–White
NP94 2.192 0.628**
standard errors are in parentheses. * denotes statistical significance at the 10% level,
(8.088) (0.247)
** at the 5% level, and *** at the 1% level.
Notes on all panels
Quadratic in running variable Y Y
forms and samples within increasingly narrow intervals near the Other county-level controls Y Y
Sample size 272 1333
cutoff point. Overall, 2SLS estimates are very small in magnitude,
and none are statistically significant at conventional levels, suggesting Notes: NP94 is an indicator variable that is equal to one if the county was designated as
a National Poor County in 1994. Eligible is an indicator variable that is equal to one
no differential trends around the cutoff.
if the county's 1994 rural net income per capita was below the poverty line.
The identifying assumption underlying the RD design is that prior to County-level controls include minority county indicator, revolutionary base indicator,
treatment, only the propensity scores of the counties change discretely log population, log sown area per capita in 1990 and other labor market measures
at the critical cutoffs. All other county-level factors, observable or calculated using the 1990 Population Census. All regressions control for county-type
unobservable, should evolve smoothly with the running variable, espe- and provincial dummies. Huber–White standard errors are in parentheses. * denotes
statistical significance at the 10% level, ** at the 5% level, and *** at the 1% level.
cially at the cutoffs. As a partial test of this assumption, we check for
discontinuities in the predetermined county characteristics at the cutoff
that may confound our estimates. Table 8 gives the estimated disconti- In 1994, the administrator used 1992 data to allocate treatment, and
nuities for pre-determined county-level characteristics. In addition to exact poverty lines were not released until after data were collected.
the 1990 baseline characteristics contained in our original data set, we Fig. 7 presents a histogram of the number of counties at each of the
also generate several other county level labor market variables using 10-yuan bins of 1992 rural income per capita. It appears that there is
the 1990 Population Census. Each entry is a discontinuity estimate for no discernible jump in the density at the poverty lines, which suggests
a different pre-determined characteristic, calculated in the same man- no evidence of nonrandom sorting across the cutoffs.
ner as for our baseline specification (a quadratic in the running variable
with different slopes above and below the cutoff), but using no auxiliary 5.5. Rate of return
controls. We find little evidence of any discontinuity in these pre-
determined county characteristics. For a subset of the pre-determined Our estimates of the program's effect on rural income can be used to
variables, results are also shown in Fig. 6, which plots average county calculate the rate of return on public investments. To be conservative,
characteristics against the running variable. For each variable, we plot we use the estimate from our preferred specification that has the richest
the predicted outcome from baseline regressions. Generally speaking, set of controls, as reported in the last column of Table 4. Our estimates
the figures indicate that none of the discontinuity estimates are statisti- indicate that the program increased per capita income gains by 38.4%
cally distinguishable from zero, suggesting no clear breaks around the from 1994 to 2000. In real terms, central government poverty reduction
cutoff. funding during the same period averaged 19.1 billion yuan per year (in
The continuity assumption can be violated in the presence of precise 1994 yuan), equivalent to 95.7 yuan per person per year. This comprises
sorting around the eligibility threshold (McCrary, 2007). According to the central government's outlays on credit, budgetary grants, and public
the institutional setup, manipulation of this sort should not be expected.
Table 10
Linear spline regression discontinuity estimates with different window widths.
Table 8
Continuity of pre-determined county-level characteristics. Window width: ±500 ±400 ±300 ±200 ±100
1990 baseline characteristics Panel A: 1st-stage (dependent variable: NP94)
Eligible 0.412*** 0.371*** 0.282*** 0.166*** 0.138
Minority county Revolutionary Log Log sown area
(0.032) (0.035) (0.043) (0.059) (0.094)
base population per capita

−0.029 −0.032 0.108 −0.124 Panel B: reduced-form (dependent variable: change in log income per capita 94–00)
(0.045) (0.028) (0.097) (0.076) Eligible 0.137*** 0.114*** 0.138*** 0.099* 0.027
(0.042) (0.044) (0.050) (0.060) (0.076)
1990 Population Census characteristics
Panel C: 2SLS (dependent variable: change in log income per capita 94–00)
Fraction with high Fraction with Fraction Fraction
NP94 0.333*** 0.309*** 0.491** 0.596 0.198
school or more college or more working disabled
(0.107) (0.126) (0.196) (0.431) (0.582)
0.002 −0.000 −0.008 −0.002 Sample size 1489 1326 1040 696 176
(0.006) (0.001) (0.008) (0.002)
Notes: NP94 is an indicator variable that is equal to one if the county was designated as a
Notes: Each entry is a discontinuity estimate for a different pre-determined characteristic, National Poor County in 1994. Eligible is an indicator variable that is equal to one if the
calculated in the same manner as for our baseline specification (a quadratic in the running county's 1994 rural net income per capita was below the poverty line. All regressions
variable with different slopes above and below the cutoff), but using no auxiliary controls. control for the county-type dummy and the running variable with different slopes on
Huber-White standard errors are in parentheses. * denotes statistical significance at the two sides of the cutoff. Standard errors are in parentheses. * denotes statistical significance
10% level, ** at the 5% level, and *** at the 1% level. at the 10% level, ** at the 5% level, and *** at the 1% level.
10 L. Meng / Journal of Public Economics 101 (2013) 1–11

.4
1

Revolutionary base
.8
Minority county

.3
.6

.2
.4

.1
.2
0

0
-500 0 500 -500 0 500
1992 Income per capita relative to cutoff 1992 Income per capita relative to cutoff
Fraction with high school or more

Fraction with college or more

0 .002 .004 .006 .008 .01
.1
.08
.06
.04
.02
0

-500 0 500 -500 0 500

1992 Income per capita relative to cutoff 1992 Income per capita relative to cutoff

Notes: Panels refer to (from top left to bottom right) the following county attributes: minority county indicator, revolutionary base indicator, fraction with
high school or more, fraction with college or more in 1990. The continuous line represents the predicted value from a second order polynomial in the
running variable, and a dummy for counties above the cutoff. Each point represents the average outcome within 25-yuan intervals of the 1992 income
per capita relative to cutoff.

Fig. 6. Similarity of counties' pre-treatment characteristics around the eligibility cutoff. Notes: Panels refer to (from top left to bottom right) the following county attributes: mi-
nority county indicator, revolutionary base indicator, fraction with high school or more, fraction with college or more in 1990. The continuous line represents the predicted
value from a second order polynomial in the running variable, and a dummy for counties above the cutoff. Each point represents the average outcome within 25-yuan intervals
of the 1992 income per capita relative to cutoff.

works. 15 Based on the 38.4-percent impact on incomes, the poverty “short-run” estimates. This finding suggests that the 8-7 Plan may
program on average increased rural income by 40.6 yuan per person only have generated a spurt in rural income that began to decay shortly
per year. This finding suggests a 42-percent rate of return. after the program was phased out.
Admittedly, even with a valid regression discontinuity design, biases
6. Conclusion in the estimates can arise from interference because of spillover effects
through local public finance (Chen et al., 2009). The national program
This study employs a panel data set to examine the performance
of the 8-7 Plan, a poverty alleviation program introduced in the
early 1990s by the Chinese government. The program's placement
rule causes a discontinuity in a county's probability of treatment as
40

400 700
a function of its pre-program per capita income. This feature is
exploited to identify the causal effects of the program on change in
the county's per capita income. Based on a regression discontinuity
30
Frequency

approach, our analysis reveals that the program produced a signifi-

cant positive effect on income growth. This finding is robust to differ-
ent model specifications. According to our estimates, the program
20

increased per capita income by approximately 38% during the 1994

to 2000 period. This estimated program effect is considerably larger
than that obtained from a conventional DD method, which indirectly
10

reveals the important role of initial endowments in the path toward

economic development.
To examine whether the program has a lasting effect on promoting
0

0 2000 4000 6000

income growth, we likewise estimate the program's impact on change
1992 Rural net income per capita
in log rural per capita income from 1994 to 2003. The estimates of
program effect in this longer time horizon are slightly smaller in size, Notes: “400” and “700” indicate the two cutoff values used for 1994 designation. The
histogram has a bin width of 10 yuan.
and less significant for a number of model specifications than the
Fig. 7. Histogram of the 1992 rural net income per capita. Notes: “400” and “700” indicate
15
Calculations are based on statistics provided by Wang (2005). the two cutoff values used for 1994 designation. The histogram has a bin width of 10 yuan.
 L. Meng / Journal of Public Economics 101 (2013) 1–11
would crowd out provincial government spending in the National Poor
Counties, and increase spending in non-participating counties. In the
presence of such spillover effects, our estimates would underestimate
the program's true impact. Unfortunately, more detailed local public
finance statistics are currently unavailable for us to test for such spillover
effects. Learning more about this issue remains an interesting topic for
future research.
Constrained by data availability, assessment of the 8-7 Plan focuses
on average income growth instead of poverty reduction. The use of
county-level data prevents us from depicting the program's distributional
implications. More research is needed to examine these dimensions of
the program effect.
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