Towards Common Prosperity: The Impact of Targeted Poverty Alleviation Policy on Multidimensional Income Disparities Among Rural Poor Households

The issues of income inequality and poverty are intrinsically linked and represent persistent global governance challenges. China faced significant hurdles, including absolute rural poverty and a widening urban–rural development gap. The “Targeted Poverty Alleviation” policy (TPA), implemented from 2014 onward, employed comprehensive measures, including household registration, industrial support, and skills training. By the end of 2020, this policy successfully eradicated absolute rural poverty under the prevailing standard, contributing a Chinese solution to global poverty reduction. Beyond addressing absolute deprivation, whether this policy has impacted relative rural poverty and urban–rural inequality remains a subject of debate in existing literature. Utilizing microdata from the China Family Panel Studies (CFPS) from 2014 to 2020, this study employs the Kakwani measure to measure relative deprivation levels, thereby identifying income disparities both within rural areas and between urban and rural regions. Combining empirical tools, including a Difference-in-Differences (DID) framework, Propensity Score Matching (PSM), and Entropy Balancing method, the analysis finds that the Targeted Poverty Alleviation policy significantly curbs income inequality both within rural areas and across the urban–rural divide. Further investigation reveals that this effect operates through three primary mechanisms: promoting diversified rural livelihoods, improving incomes for impoverished households, and bridging knowledge and information gaps. Heterogeneity analysis indicates that the inequality-reducing effect of the policy is more pronounced in non-major grain-producing regions, low-income provinces, and among vulnerable groups such as the elderly, low-income individuals, and women. This study addresses the lack of detailed micro-level measurement, deepens the explanatory analysis of mechanisms and heterogeneity, and provides a basis for formulating differentiated policies in line with the vision of common prosperity.