Capital assets and poverty transitions in rural China

Abstract

PurposeThis article aims to examine the role of capital assets in rural household poverty transitions of poverty escape and poverty descent over periods of 2014–2016 and 2016–2018.Design/methodology/approachBased on the sustainable livelihood approach, this paper uses binary logit model to explore the influence of multidimensional capital assets on poverty transitions and use instrumental variable estimation to solve the endogeneity between total net asset and poverty transitions.FindingsCapital assets have significant impacts on household poverty transitions. The role of capital assets in households' poverty escape and poverty descent are not symmetrical. The authors verify that rural households with rich total net asset are more likely to escape poverty and less likely to descend into poverty by using instrumental variable estimation. The authors verify that there is a mediation effect that total net asset can help households' escaping poverty and prevent them from falling into poverty through promoting rural households to engage in business activities.Originality/valueThis paper is the first to explore how capital assets affect poverty transitions in rural China based on the sustainable livelihood approach. The findings of this research can provide valuable policy implications for the pursuit of common prosperity in China and references for other developing countries.