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Where Did All the Remittances Go? Understanding the Impact of Remittances on Consumption Patterns in Rural China

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Author Info
Yu Zhu ()
Zhongmin Wu
Liquan Peng
Laiyun Sheng

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Abstract

We focus on the impact of migrants’ remittances on consumption patterns in rural China, allowing for endogeneity of remittances and county fixed-effects. We find that the marginal propensity to consume out of remittances is close to unity, which is far greater than that out of non-migrant earnings or farm income. These findings imply that rural households take remittances as permanent income and are consistent with the prevalence of circular and repeat migration which is largely caused by the combination of the restrictive hukou (household registration) system and the rigid land tenure system in China.

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File URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/0907.pdf
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Publisher Info
Paper provided by Department of Economics, University of Kent in its series Studies in Economics with number 0907.

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Date of creation: May 2009
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Handle: RePEc:ukc:ukcedp:0907

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Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP
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Related research
Keywords: Rural-Urban Migration; Remittances; Consumption Patterns; Fixed-Effect Instrumental-Variables Estimation;

Find related papers by JEL classification:
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
R23 - Urban, Rural, and Regional Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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This page was last updated on 2009-11-11.

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