Minimum income programme and welfare dependency in China

Abstract

In the mid‐1990s China introduced a means‐test cash benefit called the Minimum Living Standard Guarantee System (dibao). Alongside the increases in both the number of beneficiaries and the budget, there is growing public concern that dibao is creating welfare dependency. Using survey data collected in three cities in China, we investigated to what extent dibao beneficiaries look for work. Focus group discussions were held with programme administrators and beneficiaries. While headline figures suggest that a considerable proportion of beneficiaries are of working‐age and able to work, their personal and household circumstances are important factors in determining their long‐term unemployment. There are also dibao design issues that have created financial disincentives to work. The specific origins of the policy of addressing the problem created by layoffs of inefficient state‐owned enterprises are still affecting the implementation of the programme and preventing it from playing a significant role in poverty reduction.

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