Does Migration Income Help Hometown Business? Evidences from Rural Households Survey in China

Jialu Liu ()
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Jialu Liu: Allegheny College

Economics Bulletin, 2010, vol. 30, issue 4, 2598-2611

Abstract: This empirical study examines effects of household migration income on non-farm business in rural China. The restrictions on labor mobility in China were loosened after the economic reform in 1978. As a result, more and more rural households have family members engaging in temporary migration, working and living between rural home and urban areas, which forms a large "floating" population of migrant workers. The income migrant workers bringing home provides a vital capital resource for the credit deprived rural areas, and hence strongly promotes hometown non-farm business. This paper raises three questions: first, how does migration income affect the probability that rural households will start non-farm business? Second, how does migration income impact the probability that rural households will remain in non-farm business after starting up? Third, whether and how much does migration income increase non-farm business income? The findings indicate that migration income not only raises the probability of starting and remaining in non-farm business, but also increases non-farm business income. The empirical results in this paper confirm that, for financially constrained rural households in China, migration income offers a valuable capital resource and facilitates the development of diverse business operation in rural China.

Keywords: Migration; Rural China; Non-farm Business; Probit (search for similar items in EconPapers)
JEL-codes: C1 J0 (search for similar items in EconPapers)
Date: 2010-10-05
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Citations: View citations in EconPapers (1)

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