Economic growth alone may not solve the problem of poverty. Our behavioral analyses reveal that human capital is one of the key forces of reducing poverty and promoting economic growth. However, one's human capital accumulation is restricted by his personal lifetime funds. Then the efficiency of national funds allocation in China is investigated. Results show that an equal allocation of national funds should be adopted by Chinese government, with which the economy can develop in a way both fast and just.

Economic growth alone may not solve the problem of poverty. Our behavioral analyses reveal that human capital is one of the key forces of reducing poverty and promoting economic growth. However, one''s human capital accumulation is restricted by his personal lifetime funds. Then the efficiency of national funds allocation in China is investigated. Results show that an equal allocation of national funds should be adopted by Chinese government, with which the economy can develop in a way both fast and just.:Acknowledgements IV Short Table of Contents VI List of Figures XI List of Tables XIII List of Abbreviations XIV List of Used Symbols XV 1 Introduction 1 1.1 Motivation 1 1.2 Important Concepts 2 1.2.1 Poverty 2 1.2.2 Absolute Poverty and Relative Poverty 3 1.2.3 The Household Responsibility System (HRS) 7 1.3 The Plan and Novelty of theWork 9 2 The Efforts, Features, and Problems of the Reduction of Peasants’ Poverty in the Past Three Decades in China 11 2.1 How Did the Problem of Peasants’ Poverty Originate and Evolve? 11 2.2 China’s Poverty Reduction Efforts 15 2.2.1 Phase 1: Rural Reforms and the Implementation of the HRS 15 2.2.2 Phase 2: County-Based Poverty Reduction during 1986-1993 16 2.2.3 Phase 3: The 8-7 Poverty Reduction Plan during 1994-2000 18 2.2.4 Phase 4: The New Century Rural Poverty Alleviation Plan for 2001-2010 19 2.3 Features of the Peasants’ Poverty Reduction 20 2.3.1 The Overall Achievement Is Remarkable 20 2.3.2 The Decline in the Incidence of Poverty Was Uneven 23 2.3.3 The Role of Human Capital Is Crucial in Income Generating 25 2.3.4 Migration Is a Path out of Poverty, But it Is Restricted by many Factors 26 2.4 Existing Problems in China’s Poverty Reduction Course 31 2.4.1 The Total Funds for Poverty Alleviation Programs Are Insufficient 31 2.4.2 The Official Poverty Line Is Too Low to Reflect the Real Situation of Peasants’ Poverty 33 2.4.3 The Overall Economic Growth Has Become Less Responsive to Poverty Reduction 35 2.4.4 Vulnerability to Poverty Extensively Exists 36 3 Literature Review on the Peasants’ Economic Behaviour 39 3.1 About the Rationality of Peasants 39 3.2 The Economic Behavior of Chinese Peasants before the Land Collectivization Movement in the Late 1950s 43 3.3 The Economic Behavior of Peasants after 1978 under the HRS and the “Hukou” System 45 4 The Job Choice and Land Rent Determination 47 4.1 Assumptions 47 4.2 The Job Choice 48 4.3 The Land Rent Determination and the Corresponding Optimal Farm Scale 50 4.4 The Empirical Evidence 54 4.4.1 Evidence for Proposition 1 55 4.4.2 Evidence for Proposition 2 56 4.4.3 A Case of the Land Rental Activities in L village 61 4.4.4 Summary 64 5 The Human Capital Accumulation 65 5.1 Introduction 65 5.2 The Basic Model 70 5.3 An Extension to the Case of an Imperfect Capital Market 77 5.4 Summary 79 6 The Rural-Urban Migration 81 6.1 A Review of Todaro’s Work 81 6.2 A Review of the Harris-Todaro Model 88 6.3 Remarks on the Above Models 95 6.4 Our Model 96 6.5 Empirical Evidence 101 6.6 Conclusions 102 7 The National Funds Allocation Efficiency in China 103 7.1 Introduction 103 7.2 Literature Review 106 7.3 Possible Relations between the Expected PLE and the PLF 109 7.3 Empirical Analysis 115 7.3.1 The Trends of Per-Capita Income of Urban and Rural Residents 115 7.3.2 The Trends of Per-Capita Earnings of Urban and Rural Residents 117 7.3.3 The Trends of Per-Capita Non-Earning Income of Urban and Rural Residents 118 7.3.4 An Estimate for the Relationship between the Expected PLE and PLF in China 120 7.4 Concluding Remarks 122 8 Review and Conclusions 123 8.1 Review 123 8.2 Conclusions 125 8.3 Suggestions to Further Research 125 Appendix 127 References 132