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Where Did All the Remittances Go? Understanding the Impact of Remittances on Consumption Patterns in Rural China

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  • Yu Zhu

    ()

  • Zhongmin Wu
  • Liquan Peng
  • Laiyun Sheng

Abstract

We focus on the impact of migrants’ remittances on consumption patterns in rural China, allowing for endogeneity of remittances and county fixed-effects. We find that the marginal propensity to consume out of remittances is close to unity, which is far greater than that out of non-migrant earnings or farm income. These findings imply that rural households take remittances as permanent income and are consistent with the prevalence of circular and repeat migration which is largely caused by the combination of the restrictive hukou (household registration) system and the rigid land tenure system in China.

Suggested Citation

  • Yu Zhu & Zhongmin Wu & Liquan Peng & Laiyun Sheng, 2009. "Where Did All the Remittances Go? Understanding the Impact of Remittances on Consumption Patterns in Rural China," Studies in Economics 0907, School of Economics, University of Kent.
  • Handle: RePEc:ukc:ukcedp:0907
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    Cited by:

    1. Démurger, Sylvie & Wang, Xiaoqian, 2016. "Remittances and expenditure patterns of the left behinds in rural China," China Economic Review, Elsevier, vol. 37(C), pages 177-190.
    2. Niu, Chiyu & Arends-Kuenning, Mary, 2016. "No Country for Old Men: An Investment Motive for Downward Inter-generational Transfers in Rural China," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 236033, Agricultural and Applied Economics Association.
    3. de Brauw, Alan & Mu, Ren, 2011. "Migration and the overweight and underweight status of children in rural China," Food Policy, Elsevier, vol. 36(1), pages 88-100, February.

    More about this item

    Keywords

    Rural-Urban Migration; Remittances; Consumption Patterns; Fixed-Effect Instrumental-Variables Estimation;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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