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Measurement and Decomposition of Household's Vulnerability in Rural China——Empirical Analysis Based on Panel Data of CFPS
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TitleMeasurement and Decomposition of Household's Vulnerability in Rural China——Empirical Analysis Based on Panel Data of CFPS  
AuthorYang Wen,Sun Bangzhu and Wang Xuelong  
OrganizationInstitute of Social Economy and Culture, Peking University; Department of Economics, Hokkaido University 
Key WordsVulnerability; Covariant Risk; Idiosyncratic Risk; Social Capital 
AbstractVulnerability can combine inequality with volatility of household's consumption to reflect household's welfare level. Measurement and decomposition of vulnerability is helpful to explore household's welfare level and influencing factors. Theoretically, based on utility theory, this paper defines vulnerability, and further decomposes it to reflect inequality and volatility of household's consumption. Empirically, this paper uses CFPS data to measure and decompose household's vulnerability in rural China. The result of measurement shows that a majority of households in rural China are vulnerable, and decomposition finds that compared to inter-village inequality, intra-village inequality is the main part of vulnerability, and unexplained risk is the main resource of vulnerability among all the risks. Using household's vulnerability and its five decompositions to regress a set of household's variables by OLS method, this paper gets two important results. One is that the bigger a household size is, the less vulnerable the household is, and the other is that the more social capital a household possesses, the less vulnerable the household is. The two conclusions can effectively explain households in rural China tend to be big ones, and frequent ceremonial activities among relatives and friends. 
Serial NumberWP108 
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