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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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    Cited by:

    1. Clemens, Michael A. & Mendola, Mariapia, 2020. "Migration from Developing Countries: Selection, Income Elasticity, and Simpson's Paradox," IZA Discussion Papers 13612, Institute of Labor Economics (IZA).
    2. Jin, Zhangfeng & Pan, Shiyuan, 2020. "Incentive Pay and Firm Productivity: Evidence from China," GLO Discussion Paper Series 479, Global Labor Organization (GLO).
    3. Clemens, Michael A., 2022. "Do Cash Transfers Deter Migration?," IZA Policy Papers 191, Institute of Labor Economics (IZA).
    4. Selod, Harris & Shilpi, Forhad, 2021. "Rural-urban migration in developing countries: Lessons from the literature," Regional Science and Urban Economics, Elsevier, vol. 91(C).
    5. Khraiche, Maroula & Boudreau, James, 2020. "Can lower remittance costs improve human capital accumulation in Africa?," Journal of Policy Modeling, Elsevier, vol. 42(5), pages 1000-1021.
    6. Li, Jingrong & Zhang, Chenlei & Mi, Yunsheng, 2021. "Land titling and internal migration: Evidence from China," Land Use Policy, Elsevier, vol. 111(C).
    7. David Lagakos, 2020. "Urban-Rural Gaps in the Developing World: Does Internal Migration Offer Opportunities?," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 174-192, Summer.
    8. Cust,James Frederick & Mensah,Justice Tei, 2020. "Natural Resource Discoveries, Citizen Expectations and Household Decisions," Policy Research Working Paper Series 9372, The World Bank.
    9. Chan Mono Oum & Gazi M. Hassan & Mark J. Holmes, 2022. "Impact of Microcredit on Labour Migration Decisions: Evidence from a Cambodian Household Survey," Working Papers in Economics 22/01, University of Waikato.
    10. Martinez Flores, Fernanda & Milusheva, Sveta & Reichert, Arndt R., 2021. "Climate anomalies and international migration: A disaggregated analysis for West Africa," Ruhr Economic Papers 910, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    11. Lanati, Mauro & Sanfilippo, Marco & Santi, Filippo, 2023. "Aid and internal migration in Malawi," World Development, Elsevier, vol. 162(C).
    12. Licheng Xu & Xiaodong Du, 2022. "Land certification, rental market participation, and household welfare in rural China," Agricultural Economics, International Association of Agricultural Economists, vol. 53(1), pages 52-71, January.
    13. Wang, Qing & Zhang, Shiying, 2022. "Gender inequality in nutrition intake: Evidence from a large assistance program," Economics & Human Biology, Elsevier, vol. 45(C).
    14. Shu Cai & Albert Park & Winnie Yip, 2022. "Migration and experienced utility of left-behind parents: evidence from rural China," Journal of Population Economics, Springer;European Society for Population Economics, vol. 35(3), pages 1225-1259, July.
    15. Zhang, Jiaping & Zhang, Huirong & Gong, Xiaomei, 2022. "Mobile payment and rural household consumption: Evidence from China," Telecommunications Policy, Elsevier, vol. 46(3).
    16. Xie, Gang & Zhang, Lei, 2022. "Effects of school closure on household labor supply: Evidence from rural China," China Economic Review, Elsevier, vol. 71(C).
    17. Federico Carril-Caccia & Jordi Paniagua & Marta Suarez-Varela, 2022. "Forced migration and food crises," Working Papers 2022.06, International Network for Economic Research - INFER.

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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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