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Why do migrant households consume so little?

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  • Chen, Xiaofen

Abstract

Exploring data from the migrant and urban household surveys of the Chinese Household Income Project, this paper dissects the underlying causes of the depressing effect of the hukou system on migrant household consumption to two channels. On one hand, migrants' disentitlement to local urban hukou creates financial insecurity through barriers to employment, social welfare, medical insurance, etc., thereby encouraging precautionary saving. On the other hand, it promotes temporary migration, allows divergence in tastes and values from local urban residents to persist, and incentivizes migrant households to save their transitory income. Factors reflecting these two channels, such as medical and pension insurances, the duration of migration, and local homeownership, are specifically modeled, and they are found to contribute to the discrepancies in consumption between migrant and local urban households, among other factors. In addition, the marginal propensity to consume exhibits heterogeneity across migrant households; it is higher with a longer duration of migration, local homeownership, and self-employment. The lack of these attributes further reinforces the reluctance of migrant households to consume.

Suggested Citation

  • Chen, Xiaofen, 2018. "Why do migrant households consume so little?," China Economic Review, Elsevier, vol. 49(C), pages 197-209.
    • Handle: RePEc:eee:chieco:v:49:y:2018:i:c:p:197-209
    DOI: 10.1016/j.chieco.2017.11.005
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    Cited by:

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    4. Chuanming Sun & Guoxin Tan & Xingyu Chai & Haiqing Zhang, 2023. "Analysis on the Satisfaction of Public Cultural Service by Township Residents: A Qualitative Perspective," Sustainability, MDPI, vol. 15(9), pages 1-23, April.
    5. Long, Houyin & Li, Jianglong & Liu, Hongxun, 2022. "Internal migration and associated carbon emission changes: Evidence from cities in China," Energy Economics, Elsevier, vol. 110(C).
    6. Le Wen & Krishna P. Paudel & Qinying He, 2022. "Temporary Migration and Savings Rates: Evidence from China," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(6), pages 2810-2849, December.
    7. Dong, Xiaoqi & Liang, Yinhe & Zhang, Jiawei, 2023. "Fertility responses to the relaxation of migration restrictions: Evidence from the Hukou reform in China," China Economic Review, Elsevier, vol. 81(C).
    8. Le Wen & Krishna P. Paudel & Youhua Chen & Qinying He, 2021. "Urban segregation and consumption inequality: Does hukou conversion matter in China?," Review of Development Economics, Wiley Blackwell, vol. 25(4), pages 2298-2322, November.
    9. Yufei Bai & Wenjing Liu & Wujian Yang & Wen Zuo & Hemin Song, 2023. "Urbanization, Industrial Structure Upgrading, and Lottery Consumption based on the Sustainable Development of the Emerging Markets: Evidence from China," SAGE Open, , vol. 13(2), pages 21582440231, June.
    10. Tan, Jing & Xu, Hao & Yu, Jingwen, 2022. "The effect of homeownership on migrant household savings: Evidence from the removal of home purchase restrictions in China," Economic Modelling, Elsevier, vol. 106(C).
    11. Chunshan Zhou & Ming Li & Guojun Zhang & Yuqu Wang & Song Liu, 2020. "Heterogeneity of Internal Migrant Household Consumption in Host Cities: A Comparison of Skilled Migrants and Labor Migrants in China," Sustainability, MDPI, vol. 12(18), pages 1-16, September.
    12. Mega Febrina Kusumo Astuti & Wiwandari Handayani, 2020. "Livelihood vulnerability in Tambak Lorok, Semarang: an assessment of mixed rural-urban neighborhood [Vulnerabilität des Lebensunterhalts in Tambak Lorok, Semarang: Bewertung einer gemischt ländlich," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 40(2), pages 137-157, October.
    13. de Bruin, Anne & Liu, Na, 2020. "The urbanization-household gender inequality nexus: Evidence from time allocation in China," China Economic Review, Elsevier, vol. 60(C).
    14. Yuke He & Geng Niu & Guochang Zhao, 2022. "Parents' pension eligibility and migrant consumption in urban China: Evidence from a quasi‐experiment," Review of Development Economics, Wiley Blackwell, vol. 26(4), pages 2317-2335, November.
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