Are migrants a threat? Migrant children and human capital investments among local households in urban China

The educational spillovers of migrant children in receiving areas have drawn widespread attention in countries undergoing massive internal migration. Yet few studies have explored how migrant students affect the decision-making process of native households. This study examines the effects and underlying mechanisms of internal migrant children on human capital investments among local households in urban China. Leveraging the random student-classroom assignment within middle schools, we find that migrant peer composition has a significant positive impact on local households’ spending on their children’s education, especially out-of-school education expenditure. These positive effects are more pronounced among local students who are male, in the ninth grade, and come from high socioeconomic status families. The results of our mechanism analysis suggest that the presence of migrant children leads local parents to overestimate their children’s academic performance and raises concerns about potential adverse effects on their children’s educational outcomes. However, we have not found compelling evidence indicating that migrant classmates significantly affect local students’ learning environment, emotional well-being, and actual academic achievements. Our study contributes to the ongoing debate on the educational inclusion of internal migrant children in China and similar contexts, highlighting the importance of addressing the biased beliefs of local households over migrants.