Heterogeneity Perspective on the Dynamic Identification of Low-Income Groups and Quantitative Decomposition of Income Increase: Evidence from China

Abstract

Common prosperity is an essential requirement of socialism. To achieve common prosperity, unbalanced urban–rural development, insufficient regional development, and progressively increasing income disparity between groups must be solved. The measure of raising the low and expanding the middle is receiving more and more attention in gradually achieving common prosperity. In order to formulate long-term income increase strategies for low-income groups with regional characteristics, this article, based on income group data, uses the weak relative poverty criterion to dynamically identify low-income groups and decomposes the changes in the income increase in low-income groups from urban–rural, regional and provincial perspectives to explore the causes and the extent of their influence on the income increase in low-income groups. This paper concludes that the size of low-income groups is generally on a declining trend, while the size of urban low-income groups has increased. Inequality in income distribution reduces the income increase in low-income groups; individual heterogeneity is a key factor that promotes the income increase in low-income groups. It is more difficult to increase the income of low-income groups in central and western rural areas than in eastern rural areas. In the future, on the basis of classifying the paths of income increase for low-income groups in provincial districts and implementing the corresponding income increase policies by combining the characteristics of different categories, it helps to formulate a long-term income increase mechanism for low-income groups that combines the characteristics of regional development and meets the actual regional development. It will promote the long-term income increase in low-income groups and gradually realize common prosperity.