Identifying a Sustained Pathway to Multidimensional Poverty Reduction: Evidence from Two Chinese Provinces

Poor rural households in developing countries often endure many-faceted burdens including monetary poverty, nutrition deficiency and energy shortage due to reliance on limited local natural resources with low utilisation efficiency. We investigate a sustained pathway in rural China to escape the vicious circle between three important dimensions of poverty – deficiency of income, malnutrition and a low energy consumption profile in terms of reliance on firewood. By exploiting household panel data and a dynamic and recursive multi-equation mixed mode, we identify inter-locking deprivations in income, nutrition and energy consumption. Firewood plantations only offer short-term solutions to break them through income effects, while the sustained pathways in the long-term are increasing agricultural labour productivity and provision of agricultural loans.