Host Identity and Consumption Behavior: Evidence from Rural–Urban Migrants in China

Abstract

Rural–urban migrants significantly contribute to developing economy, whereas they face high housing prices, rare work opportunities and insufficient consumption. By stimulating the consumption of migrants, their happiness and life satisfaction can increase, regional consumption structural transformation can be stimulated, and economic growth can be boosted. By exploiting the data from the “China Migrants’ Dynamic Survey” (CMDS) conducted by the National Health and Family Planning Commission of China, this study explores the effect of rural–urban migrants’ host identity on their consumption. We measure host city identity by migrants’ sense of belonging in the city. Propensity score matching (PSM), instrumental variable methods (IV), and structural equation modeling (SEM) are adopted to tackle down the potential selection bias and endogeneity concerns. As indicated by the empirical results, host identity significantly impacts rural–urban migrants’ consumption, while regional cultural differences hinder migrants from forming host identity. Compared with those without a host identity, migrants with a host identity, the monthly household consumption increased by 4%, and savings decreased significantly by 1.7%. As revealed by the heterogeneity analysis, the host identity effects are significantly larger for migrants aged over 30 years or for those staying in big cities. The results of SEM show that a one-unit increase in the latent variable of identity will increase the consumption by 5.2%, and education, social insurance, and household registration have a significant effect not only on consumption but also on host identity. The findings of this paper contribute to a comprehensive understanding of the psychological and economic integration of migrants in cities and provide valuable suggestions for city managers and policymakers.