2009 Discussion Papers
School of Economics Discussion Paper 09/23
Do Migrants Really Save More?
Understanding the Impact of Remittances on Savings in Rural China
Yu Zhu¹, Zhongmin Wu², Meiyan Wang³, Yang Du³, Fang Cai³
¹ School of Economics, University of Kent, Canterbury, Kent, CT2 7NP, UK
² Nottingham Business School, Nottingham Trent University, Nottingham, NG1 4BU, UK
³ Institute of Population and Labor Economics, Chinese Academy of Social Sciences, Beijing 100732, China
This paper studies the impact of remittances on the savings behaviour of rural households in China, using a cross-sectional survey. Allowing for endogeneity and left-censoring of remittances, we find that the marginal propensity to save out of remittances is well below half of that out of other sources of incomes. Moreover, we find no evidence of any direct effect of remittances on either capital input or gross output of farm production. These findings are in line with recent studies which conclude that remittances are largely used for consumption purposes by rural Chinese households and there is no link between migration and productive investment.
JEL Classification: D12, O15, R23.
Keywords: Rural-urban migration, remittances, savings, instrumental-variables estimation, quantile regression.
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Published in the following journal:
Journal of Development Studies, 48(5), 654-672