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

Yu Zhu, Zhongmin Wu (), Liquan Peng and Laiyun Sheng

Studies in Economics from School of Economics, University of Kent

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.

Keywords: Rural-Urban Migration; Remittances; Consumption Patterns; Fixed-Effect Instrumental-Variables Estimation (search for similar items in EconPapers)
JEL-codes: D12 D13 J61 R23 (search for similar items in EconPapers)
Date: 2009-05
New Economics Papers: this item is included in nep-cna, nep-dev, nep-mig and nep-tra
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Citations: View citations in EconPapers (4)

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Journal Article: Where did all the remittances go? Understanding the impact of remittances on consumption patterns in rural China (2014)
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