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Does Migration Income Help Hometown Business? Evidences from Rural Households Survey in China

Author

Listed:
  • Jialu Liu

    () (Allegheny College)

Abstract

This empirical study examines effects of household migration income on non-farm business in rural China. The restrictions on labor mobility in China were loosened after the economic reform in 1978. As a result, more and more rural households have family members engaging in temporary migration, working and living between rural home and urban areas, which forms a large "floating" population of migrant workers. The income migrant workers bringing home provides a vital capital resource for the credit deprived rural areas, and hence strongly promotes hometown non-farm business. This paper raises three questions: first, how does migration income affect the probability that rural households will start non-farm business? Second, how does migration income impact the probability that rural households will remain in non-farm business after starting up? Third, whether and how much does migration income increase non-farm business income? The findings indicate that migration income not only raises the probability of starting and remaining in non-farm business, but also increases non-farm business income. The empirical results in this paper confirm that, for financially constrained rural households in China, migration income offers a valuable capital resource and facilitates the development of diverse business operation in rural China.

Suggested Citation

  • Jialu Liu, 2010. "Does Migration Income Help Hometown Business? Evidences from Rural Households Survey in China," Economics Bulletin, AccessEcon, vol. 30(4), pages 2598-2611.
  • Handle: RePEc:ebl:ecbull:eb-10-00461
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I4-P240.pdf
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    References listed on IDEAS

    as
    1. Axel Heitmueller, 2005. "Unemployment benefits, risk aversion, and migration incentives," Journal of Population Economics, Springer;European Society for Population Economics, vol. 18(1), pages 93-112, January.
    2. repec:ebl:ecbull:v:15:y:2002:i:7:p:1-5 is not listed on IDEAS
    3. Zai Liang & Yiu Por Chen & Yanmin Gu, 2002. "Rural Industrialisation and Internal Migration in China," Urban Studies, Urban Studies Journal Limited, vol. 39(12), pages 2175-2187, November.
    4. Hillel Rapoport, 2002. "Migration, credit constraints and self-employment: A simple model of occupational choice, inequality and growth," Economics Bulletin, AccessEcon, vol. 15(7), pages 1-5.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Migration; Rural China; Non-farm Business; Probit;

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

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