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

  • Jialu Liu

    ()

    (Allegheny College)

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    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.

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    File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I4-P240.pdf
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    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 30 (2010)
    Issue (Month): 4 ()
    Pages: 2598-2611

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    Handle: RePEc:ebl:ecbull:eb-10-00461
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    1. 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.
    2. Heitmueller, Axel, 2002. "Unemployment Benefits, Risk Aversion, and Migration Incentives," IZA Discussion Papers 610, Institute for the Study of Labor (IZA).
    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. repec:ebl:ecbull:v:15:y:2002:i:7:p:1-5 is not listed on IDEAS
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