Poverty Reduction and the Income Inequality in China

In 2000, the United Nations adopted the Millennium Development Goals which set targets for raising living standards in low-income countries. The first goal was to “eradicate extreme poverty and hunger” (United Nations). The World Bank defines extreme poverty as income of less than $1.25 per day (World Bank, 2010a). Based on this definition, the World Bank estimates that the percentage of the population in China living in extreme poverty has fallen from 84 percent in 1981 to about 16 percent in 2005, a period during which China’s population grew by more than 300 million people (see Table 1 on last page). Because China is a very large country with a current population approaching 1.4 billion (more than four times the United States population), its dramatic reduction in poverty over the past 30 years has had a profound effect on global poverty measures. In fact, poverty reduction in China is the main reason that the incidence of extreme poverty in developing countries has fallen from about 52 percent in 1981 to 25 percent in 2005 (Table 1). While the absolute number of poor in China fell by some 627 million, the number of poor in other developing countries actually grew slightly (from 1,065 million to 1,166 million). These figures represent a decline in the percentage of the total population in poverty in other developing countries because of general population growth over that 25-year period (World Bank, 2010b).

Defining and Measuring Poverty in Nebraska

Data recently released by the Census Bureau estimate that 47.4 million Americans, or about one-insix, are living in poverty. This latest estimate has drawn criticism from some observers who see it as an attempt to artificially inflate the magnitude of poverty in America. The criticism results from a change in methodology that included not just income (the Whitehouse Office of Management and Budget (OMB) poverty threshold for 2009 is $22,050 a year for a family of four), but also made adjustments, taking into account such things as region, out-of-pocket medical expenses and child care costs, that in total add about seven-million individuals to the poverty population.