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Where did all the remittances go? Understanding the impact of remittances on consumption patterns in rural China

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  • Y. Zhu
  • Z. Wu
  • L. Peng
  • L. Sheng

Abstract

We focus on the impact of migrants' remittances on consumption patterns in China. Using a large homogenous sample of rural households surveyed in 2001 and 2004, we find that remittances are spent on nonhousing consumption expenditures at the margin, virtually dollar-for-dollar, when we instrument remittances and local employed earnings using proxies of social networks. Our findings are robust to intra-household division of labour and to fixed-effect for the county in which the respondents are registered. These results imply that rural households largely take remittances as permanent income and are consistent with the prevalence of circular and repeat migration in China.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:applec:v:46:y:2014:i:12:p:1312-1322
    DOI: 10.1080/00036846.2013.872764
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    Cited by:

    1. Démurger, Sylvie & Wang, Xiaoqian, 2016. "Remittances and expenditure patterns of the left behinds in rural China," China Economic Review, Elsevier, vol. 37(C), pages 177-190.
    2. Yue Zhang & Xiaodong Zheng, 2022. "Internal migration and child health: An investigation of health disparities between migrant children and left-behind children in China," PLOS ONE, Public Library of Science, vol. 17(3), pages 1-15, March.
    3. Niu, Chiyu & Arends-Kuenning, Mary, 2016. "No Country for Old Men: An Investment Motive for Downward Inter-generational Transfers in Rural China," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236033, Agricultural and Applied Economics Association.
    4. Shi, Xinjie & Cui, Liu & Huang, Zuhui & Zeng, Pei & Qiu, Tongwei & Fu, Linlin & Jiang, Qiang, 2023. "Impact of internal migration on household energy poverty: Empirical evidence from rural China," Applied Energy, Elsevier, vol. 350(C).
    5. Feng, Shuaizhang & Kim, Jun Hyung & Yang, Zhe, 2021. "Effects of Childhood Peers on Personality Skills," GLO Discussion Paper Series 1004, Global Labor Organization (GLO).
    6. Kabinet Kaba & Mahamat Moustapha, 2021. "Remittances and firm performance in sub-Saharan Africa: evidence from firm-level data," Working Papers DT/2021/07, DIAL (Développement, Institutions et Mondialisation).
    7. Randazzo, Teresa & Piracha, Matloob, 2019. "Remittances and household expenditure behaviour: Evidence from Senegal∗," Economic Modelling, Elsevier, vol. 79(C), pages 141-153.
    8. Chuhong Wang & Xingfei Liu & Zizhong Yan, 2021. "Temporary versus permanent migration: The impact on expenditure patterns of households left behind," Review of Economics of the Household, Springer, vol. 19(3), pages 873-911, September.
    9. Yuanhe Yu & Jinkuo Lin & Peixiang Zhou & Shuwei Zheng & Zijun Li, 2022. "Cultivated Land Input Behavior of Different Types of Rural Households and Its Impact on Cultivated Land-Use Efficiency: A Case Study of the Yimeng Mountain Area, China," IJERPH, MDPI, vol. 19(22), pages 1-21, November.
    10. Kabinet Kaba & Mahamat Moustapha, 2021. "Remittances and firm performance in sub-Saharan Africa : evidence from firm-level data," Working Papers hal-03515100, HAL.
    11. Yu Zhu & Zhongmin Wu & Meiyan Wang & Yang Du & Fang Cai, 2011. "Do Migrants Really Save More? Understanding the Impact of Remittances on Savings in Rural China," Journal of Development Studies, Taylor & Francis Journals, vol. 48(5), pages 654-672, June.
    12. Zhao, Q. & Sun, X. & Guo, P. & Liu, X., 2018. "China s Migrant and Left-behind Children: Correlation of Parental Migration on Health, Cognitive and Non-cognitive Outcomes," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277164, International Association of Agricultural Economists.
    13. Haochuan Xu & Han Yang & Hui Wang & Xuefeng Li, 2021. "The Association of Residence Permits on Utilization of Health Care Services by Migrant Workers in China," IJERPH, MDPI, vol. 18(18), pages 1-16, September.
    14. Cheng, Zhiming, 2021. "Education and consumption: Evidence from migrants in Chinese cities," Journal of Business Research, Elsevier, vol. 127(C), pages 206-215.
    15. Zheng, Xiaodong & Fang, Zuyi & Wang, Yajun & Fang, Xiangming, 2022. "When left-behind children become adults and parents: The long-term human capital consequences of parental absence in China," China Economic Review, Elsevier, vol. 74(C).
    16. Xiaodong Zhu & Trevor Tombe, 2015. "Trade, Migration and Regional Income Differences: Evidence from China," 2015 Meeting Papers 1534, Society for Economic Dynamics.
    17. Jianbo Liu & Xiaodong Zheng & Marie Parker & Xiangming Fang, 2020. "Childhood Left-Behind Experience and Employment Quality of New-Generation Migrants in China," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 39(4), pages 691-718, August.
    18. Yuanhe Yu & Liang Wang & Jinkuo Lin & Zijun Li, 2022. "Optimizing Agricultural Input and Production for Different Types of at-Risk Peasant Households: An Empirical Study of Typical Counties in the Yimeng Mountain Area of Northern China," IJERPH, MDPI, vol. 19(21), pages 1-22, October.
    19. Feng, Qundi & He, Qinying, 2022. "Does parental migration increase upward intergenerational mobility? Evidence from rural China," Economic Modelling, Elsevier, vol. 115(C).
    20. de Brauw, Alan & Mu, Ren, 2011. "Migration and the overweight and underweight status of children in rural China," Food Policy, Elsevier, vol. 36(1), pages 88-100, February.
    21. Kashif Imran & Evelyn S. Devadason & Cheong Kee Cheok, 2019. "Developmental Impacts of Remittances on Migrant-Sending Households: Micro-Level Evidence from Punjab, Pakistan," Journal of South Asian Development, , vol. 14(3), pages 338-366, December.

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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