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Remittances and Relative Concerns in Rural China

Alpaslan Akay (), Olivier Bargain (), Corrado Giulietti (), Juan David Robalino () and Klaus Zimmermann ()
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Alpaslan Akay: University of Gothenburg

No 9163, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: subjective well-being; remittances; positional concerns (search for similar items in EconPapers)
JEL-codes: C90 D63 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2015-06
New Economics Papers: this item is included in nep-cna, nep-hap, nep-ltv, nep-mig, nep-tra and nep-upt
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Citations: View citations in EconPapers (6) Track citations by RSS feed

Published in: China Economic Review, 2016, 37, 191-207. Pre-publication version available here

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Related works:
Journal Article: Remittances and relative concerns in rural China (2016) Downloads
Working Paper: Remittances and relative concerns in rural China (2016)
Working Paper: Remittances and Relative Concerns in Rural China (2015) Downloads
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