IDEAS home Printed from https://ideas.repec.org/p/ukc/ukcedp/0923.html
   My bibliography  Save this paper

Do Migrants Really Save More? Understanding the Impact of Remittances on Savings in Rural China

Author

Listed:
  • Yu Zhu
  • Zhongmin Wu
  • Meiyan Wang
  • Yang Du
  • Fang Cai

Abstract

This paper studies the impact of remittances on the savings behaviour of rural households in China, using a cross-sectional survey. Allowing for endogeneity and left-censoring of remittances, we find that the marginal propensity to save out of remittances is well below half of that out of other sources of incomes. Moreover, we find no evidence of any direct effect of remittances on either capital input or gross output of farm production. These findings are in line with recent studies which conclude that remittances are largely used for consumption purposes by rural Chinese households and there is no link between migration and productive investment.

Suggested Citation

  • Yu Zhu & Zhongmin Wu & Meiyan Wang & Yang Du & Fang Cai, 2009. "Do Migrants Really Save More? Understanding the Impact of Remittances on Savings in Rural China," Studies in Economics 0923, School of Economics, University of Kent.
  • Handle: RePEc:ukc:ukcedp:0923
    as

    Download full text from publisher

    File URL: https://www.kent.ac.uk/economics/repec/0923.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dennis Tao Yang, 1999. "Urban-Biased Policies and Rising Income Inequality in China," American Economic Review, American Economic Association, vol. 89(2), pages 306-310, May.
    2. Du, Yang & Park, Albert & Wang, Sangui, 2005. "Migration and rural poverty in China," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 688-709, December.
    3. M. Piracha & Y. Zhu, 2012. "Precautionary savings by natives and immigrants in Germany," Applied Economics, Taylor & Francis Journals, vol. 44(21), pages 2767-2776, July.
    4. Rolf Aaberge & Yu Zhu, 2001. "The Pattern of Household Savings During a Hyperinflation: The Case of Urban China in the Late 1980s," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(2), pages 181-202, June.
    5. Dustmann, Christian & Kirchkamp, Oliver, 2002. "The optimal migration duration and activity choice after re-migration," Journal of Development Economics, Elsevier, vol. 67(2), pages 351-372, April.
    6. Zhang, Kevin Honglin & Song, Shunfeng, 2003. "Rural-urban migration and urbanization in China: Evidence from time-series and cross-section analyses," China Economic Review, Elsevier, vol. 14(4), pages 386-400.
    7. Rachel Murphy, 1999. "Return migrant entrepreneurs and economic diversification in two counties in south Jiangxi, China," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(4), pages 661-672.
    8. Talip Kilic & Calogero Carletto & Benjamin Davis & Alberto Zezza, 2009. "Investing back home Return migration and business ownership in Albania1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(3), pages 587-623, July.
    9. John Giles & Kyeongwon Yoo, 2007. "Precautionary Behavior, Migrant Networks, and Household Consumption Decisions: An Empirical Analysis Using Household Panel Data from Rural China," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 534-551, August.
    10. de Brauw, Alan & Huang, Jikun & Rozelle, Scott & Zhang, Linxiu & Zhang, Yigang, 2002. "The Evolution of China's Rural Labor Markets During the Reforms," Journal of Comparative Economics, Elsevier, vol. 30(2), pages 329-353, June.
    11. Alan de Brauw & John Giles, 2018. "Migrant Labor Markets and the Welfare of Rural Households in the Developing World: Evidence from China," World Bank Economic Review, World Bank Group, vol. 32(1), pages 1-18.
    12. Mincer, Jacob, 1978. "Family Migration Decisions," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 749-773, October.
    13. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
    14. Barry McCormick & Jackline Wahba, 2003. "Return International Migration and Geographical Inequality: The Case of Egypt," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 12(4), pages 500-532, December.
    15. Galor, Oded & Stark, Oded, 1990. "Migrants' Savings, the Probability of Return Migration and Migrants' Performance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(2), pages 463-467, May.
    16. Katz, Eliakim & Stark, Oded, 1986. "Labor Migration and Risk Aversion in Less Developed Countries," Journal of Labor Economics, University of Chicago Press, vol. 4(1), pages 134-149, January.
    17. Y. Zhu & Z. Wu & L. Peng & L. Sheng, 2014. "Where did all the remittances go? Understanding the impact of remittances on consumption patterns in rural China," Applied Economics, Taylor & Francis Journals, vol. 46(12), pages 1312-1322, April.
    18. Alice Mesnard, 2004. "Temporary migration and capital market imperfections," Oxford Economic Papers, Oxford University Press, vol. 56(2), pages 242-262, April.
    19. Jacobsen, Joyce P & Rayack, Wendy L, 1996. "Do Men Whose Wives Work Really Earn Less?," American Economic Review, American Economic Association, vol. 86(2), pages 268-273, May.
    20. Giles, John, 2006. "Is life more risky in the open? Household risk-coping and the opening of China's labor markets," Journal of Development Economics, Elsevier, vol. 81(1), pages 25-60, October.
    21. Zhongmin Wu & Yu Zhu, 2004. "Income Differential and Out-migration: the Impacts of Between-gap and Within-gap," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 2(1), pages 27-37.
    22. Edmonds, Eric, 2002. "Reconsidering the labeling effect for child benefits: evidence from a transition economy," Economics Letters, Elsevier, vol. 76(3), pages 303-309, August.
    23. de Brauw, Alan & Rozelle, Scott, 2008. "Migration and household investment in rural China," China Economic Review, Elsevier, vol. 19(2), pages 320-335, June.
    24. J. Edward Taylor & Scott Rozelle & Alan deBrauw, 1999. "Migration, Remittances, and Agricultural Productivity in China," American Economic Review, American Economic Association, vol. 89(2), pages 287-291, May.
    25. Zhao, Yaohui, 2002. "Causes and Consequences of Return Migration: Recent Evidence from China," Journal of Comparative Economics, Elsevier, vol. 30(2), pages 376-394, June.
    26. Peter Kooreman, 2000. "The Labeling Effect of a Child Benefit System," American Economic Review, American Economic Association, vol. 90(3), pages 571-583, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Christian Dreger & Tongsan Wang & Yanqun Zhang, 2015. "Understanding Chinese Consumption: The Impact of Hukou," Development and Change, International Institute of Social Studies, vol. 46(6), pages 1331-1344, November.
    2. Luc Christiaensen & Lei Pan, 2010. "Transfers and Development: Easy Come, Easy Go?," WIDER Working Paper Series 125, World Institute for Development Economic Research (UNU-WIDER).
    3. Luc Christiaensen & Lei Pan, 2010. "Transfers and Development: Easy Come, Easy Go?," WIDER Working Paper Series wp-2010-125, World Institute for Development Economic Research (UNU-WIDER).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Démurger, Sylvie & Xu, Hui, 2011. "Return Migrants: The Rise of New Entrepreneurs in Rural China," World Development, Elsevier, vol. 39(10), pages 1847-1861.
    2. Alan de Brauw & John Giles, 2018. "Migrant Labor Markets and the Welfare of Rural Households in the Developing World: Evidence from China," World Bank Economic Review, World Bank Group, vol. 32(1), pages 1-18.
    3. Yunli Bai & Weidong Wang & Linxiu Zhang, 2018. "How Long Do Return Migrants Stay in Their Home Counties? Trends and Causes," Sustainability, MDPI, Open Access Journal, vol. 10(11), pages 1-21, November.
    4. de Brauw, Alan & Rozelle, Scott, 2008. "Migration and household investment in rural China," China Economic Review, Elsevier, vol. 19(2), pages 320-335, June.
    5. Xin Meng & Chris Manning & Li Shi & Tadjuddin Nur Effendi (ed.), 2010. "The Great Migration," Books, Edward Elgar Publishing, number 13619.
    6. Bai, Y. & Wang, W. & Zhang, L., 2018. "How long do returning migrants stay in their home county: Evidence from rural China during 1998 to 2015," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277380, International Association of Agricultural Economists.
    7. Marcus H. Böhme, 2015. "Does migration raise agricultural investment? An empirical analysis for rural Mexico," Agricultural Economics, International Association of Agricultural Economists, vol. 46(2), pages 211-225, March.
    8. Michael Lokshin & Mikhail Bontch‐Osmolovski & Elena Glinskaya, 2010. "Work‐Related Migration and Poverty Reduction in Nepal," Review of Development Economics, Wiley Blackwell, vol. 14(2), pages 323-332, May.
    9. Giles, John T. & Mu, Ren, 2006. "Elder Parent Health and the Migration Decision of Adult Children: Evidence from Rural China," IZA Discussion Papers 2333, Institute of Labor Economics (IZA).
    10. Patrick S. Ward & Gerald E. Shively, 2015. "Migration and Land Rental as Responses to Income Shocks in Rural China," Pacific Economic Review, Wiley Blackwell, vol. 20(4), pages 511-543, October.
    11. Jin Yang & Hui Wang & Songqing Jin & Kevin Chen & Jeffrey Riedinger & Chao Peng, 2016. "Migration, local off-farm employment, and agricultural production efficiency: evidence from China," Journal of Productivity Analysis, Springer, vol. 45(3), pages 247-259, June.
    12. Howell, Anthony, 2017. "Impacts of Migration and Remittances on Ethnic Income Inequality in Rural China," World Development, Elsevier, vol. 94(C), pages 200-211.
    13. Bennett, Michael T. & Mehta, Aashish & Xu, Jintao, 2011. "Incomplete property rights, exposure to markets and the provision of environmental services in China," China Economic Review, Elsevier, vol. 22(4), pages 485-498.
    14. Zhang, Jian & Giles, John & Rozelle, Scott, 2012. "Does it pay to be a cadre? Estimating the returns to being a local official in rural China," Journal of Comparative Economics, Elsevier, vol. 40(3), pages 337-356.
    15. Du, Julan & He, Qing & Rui, Oliver M., 2011. "Channels of interprovincial risk sharing in China," Journal of Comparative Economics, Elsevier, vol. 39(3), pages 383-405, September.
    16. Ren Mu & Alan Brauw, 2015. "Migration and young child nutrition: evidence from rural China," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(3), pages 631-657, July.
    17. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, in: S. Kolm & Jean Mercier Ythier (ed.), Handbook of the Economics of Giving, Altruism and Reciprocity, edition 1, volume 1, chapter 17, pages 1135-1198, Elsevier.
    18. Deininger, Klaus & Jin, Songqing & Xia, Fang & Huang, Jikun, 2014. "Moving Off the Farm: Land Institutions to Facilitate Structural Transformation and Agricultural Productivity Growth in China," World Development, Elsevier, vol. 59(C), pages 505-520.
    19. Wouterse, Fleur, 2012. "Migration and Rural Welfare: The Impact of Potential Policy Reforms in Europe," World Development, Elsevier, vol. 40(12), pages 2427-2439.
    20. Du, Julan & He, Qing & Rui, Oliver M., 2011. "Channels of Interprovincial Consumption Risk Sharing in the People’s Republic of China," ADBI Working Papers 334, Asian Development Bank Institute.

    More about this item

    Keywords

    Growth and cycles; recessions; technical efficiency; technical progress.;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ukc:ukcedp:0923. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://www.kent.ac.uk/economics/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tracey Girling (email available below). General contact details of provider: https://www.kent.ac.uk/economics/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.