Temporary Migration and Savings Rates: Evidence from China

We study the effect of temporary migration on migrants' savings rates in China. This is done by developing a simple theoretical model and conducting empirical analyses using propensity score matching and two-stage least square models; the latter addresses an endogeneity problem associated with the migration intention variable. Data used in this paper are primarily from the 2017 China Migrants Dynamic Survey. Results show that temporary migration has a significant effect on migrants' savings rates. On average, migrants with a temporary intention save 3.41% points more than their permanent counterparts. Precautionary motives, permanent income, and asset specificity are the potential mechanisms affecting savings rates. A series of robustness checks show that our results are robust. Results have implications for rural and urban development and the structuring of future social safety net programs in China.