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Migration under liquidity constraints: Evidence from randomized credit access in China

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  • Cai, Shu

Abstract

This study proposes a model of migration with liquidity constraints and empirically examines the impacts of credit access on migration using data from a randomized control trial for a village banking program in China. The program increases migration by household members in treatment villages, especially in villages with low levels of assets and high migration costs. These findings are consistent with the theoretical prediction that access to credit has a greater effect on migration among households that are liquidity constrained when there are substantial upfront migration costs. Further evidence is provided by quantifying transportation costs and housing rent at the destinations.

Suggested Citation

  • Cai, Shu, 2020. "Migration under liquidity constraints: Evidence from randomized credit access in China," Journal of Development Economics, Elsevier, vol. 142(C).
    • Handle: RePEc:eee:deveco:v:142:y:2020:i:c:s0304387818308113
    DOI: 10.1016/j.jdeveco.2018.06.005
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    More about this item

    Keywords

    Migration; Microfinance; Misallocation; Liquidity constraints;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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