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Remittances and Relative Concerns in Rural China

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  • Akay, Alpaslan

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Bargain, Olivier B.

    (Aix-Marseille Université and IZA)

  • Giulietti, Corrado

    (IZA)

  • Robalinod , Juan D.

    (Cornell University)

  • Zimmermann, Klaus F.

    (IZA and Bonn University)

Abstract

The paper investigates the impact of remittances on the relative concerns of households in rural China. Using the Rural to Urban Migration in China (RUMiC) dataset we estimate a series of well-being functions to simultaneously explore the relative concerns with respect to income and remittances. Our results show that although rural households experience substantial utility loss due to income comparisons, they gain utility by comparing their remittances with those received by their reference group. In other words, we find evidence of a “status-effect” with respect to income and of a “signal-effect” with respect to remittances. The magnitudes of these two opposite effects are very similar, implying that the utility reduction due to relative income is compensated by the utility gain due to relative remittances. This finding is robust to various specifications, controlling for the endogeneity of remittances and selective migration, as well as a measure of current migrants’ net remittances calculated using counterfactual income and expenditures.

Suggested Citation

  • Akay, Alpaslan & Bargain, Olivier B. & Giulietti, Corrado & Robalinod , Juan D. & Zimmermann, Klaus F., 2015. "Remittances and Relative Concerns in Rural China," Working Papers in Economics 623, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0623
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    2. Sihong Xiong & Ya Wu & Shihai Wu & Fang Chen & Jianzhong Yan, 2020. "Determinants of migration decision-making for rural households: a case study in Chongqing, China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 104(2), pages 1623-1639, November.
    3. Zimmermann, Klaus F., 2017. "Migration for Development: From Challenges to Opportunities," GLO Discussion Paper Series 70, Global Labor Organization (GLO).
    4. Artjoms Ivlevs & Milena Nikolova & Carol Graham, 2019. "Emigration, remittances, and the subjective well-being of those staying behind," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(1), pages 113-151, January.
    5. Massimiliano Tani, 2017. "Hukou Changes and Subjective Well-Being in China," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 132(1), pages 47-61, May.
    6. 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.
    7. Tani, Massimiliano, 2015. "Hukou Changes and Subjective Well-Being," IZA Discussion Papers 9451, Institute of Labor Economics (IZA).
    8. Bose-Duker,Theophiline & Gaddis,Isis & Kilic,Talip & Lechene,Valérie & Pendakur,Krishna, 2021. "Diamonds in the Rough? : Repurposing Multi-Topic Surveys to Estimate Individual-Level Consumption Poverty," Policy Research Working Paper Series 9661, The World Bank.

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    More about this item

    Keywords

    positional concerns; remittances; subjective well-being;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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