Does the Targeted Poverty Alleviation Program Reduce Income Inequality in China?

ABSTRACT This study evaluates the impact of the targeted poverty alleviation (TPA) program in 2015 on urban–rural income inequality, defined by the ratio between the urban and rural net income. The main findings suggest that the program reduces the income ratio in poverty counties by 3.6% relative to non‐poverty counties, which implies a discernible convergence in income levels. I discuss that the significant increase in rural income per capita, improved rural employment, and more government spending contribute to the narrowing urban–rural income inequality. In conclusion, the TPA program displays a rural‐oriented character in implementation and succeeds in improving income distribution in underdeveloped regions.