Association for Public Policy Analysis & Management

Despite evidence from many developing countries on the influence of cash transfer programs on child outcomes, little research has been done in China on this topic, especially on the idea of universal child grants. In this article, we use the China Household Income Project (CHIP) 2013 rural dataset to examine the effects of China’s primary social assistance program, the Minimum Livelihood Guarantee (or Dibao), on child poverty and education spending on children in rural China. We further simulate the effects of two proposed child grants programs: one for Dibao children (Limited Child Grants, or LCG) and the other for all children (Universal Child Grants, or UCG) on child poverty and compare these results with those based on the existing social assistance program, Dibao.

The analysis is conducted on the sample of rural households with children (N = 4,671). We measure education consumption in seven categories, including expenditure on early education, elementary education, middle school education, high school education, secondary vocational school education, junior college and higher education, and continuing/adult education. Child poverty is measured in two ways: percentage of households with children whose income per capita is at or below national rural poverty line and percentage of children whose household income per capita is at or below national rural poverty line.

In analysis, we first adopt a propensity score matching method to match children from recipient and non-recipient families to estimate the “net” effects of receiving Dibao on child education consumption. Second, to estimate the potential effects of child grants programs and compare them with those from Dibao, we conduct simulation analysis to estimate the potential effects of two versions of child grants on child monetary poverty: 1) a limited version that only provides grants to children living under the local Dibao line; 2) a truly universal version that provides grants to every child under 18 years old. The effects of child grants programs are compared with those from Dibao to offer direct policy implications on whether one policy solution is more effective in addressing child poverty in China than the other.

Results show that rural Dibao receipt was associated with modest increases in total education spending but significant decreases in spending on enrichment and leisure activities. Specifically, rural Dibao receipt was associated with significant increases in spending on compulsory education for Dibao families with parents receiving Dibao and no child receiving Dibao; the increases were mostly driven by increased expenditure on middle school education.

Our simulation results show that UCG is more cost effective in reducing child poverty than both LCG and Dibao, the two policies that showed similar small effects on child poverty reduction. One of the reasons for this finding is the severe mis-targeting and leakage problems that exist in rural Dibao, which leads to the exclusion of poor children from receiving the cash transfers. In order to alleviate child poverty effectively, the Chinese government should focus on reducing mis-targeting and leakage in current social assistance programs, or better yet, implementing UCG, which is more cost effective.