This paper evaluates the impact of 8-7 Plan, the second wave of China’s poverty alleviation program, on rural income growth at the county level over the period 1994-2004. Program participation was largely determined by whether a county’s pre-program income fell below certain poverty lines. The discreteness of the assignment rule is exploited to obtain convincing estimates of the program effect. Using a panel dataset, we find that the 8-7 Plan resulted in a substantial gain in rural income for the treated counties. The empirical findings also indirectly reveal the important role of initial endowments in economic development.