The impact of remittance income on rural households in China

Abstract

PurposeThe objective of this paper is to evaluate the impact of remittance income on rural households in China.Design/methodology/approachUsing data from a large survey of farming households in three Chinese provinces, the impacts of remittances and other types of income on consumption, production expenditures is evaluated. The econometric models used in this study include logit, tobit and ordinary least squares models.FindingsIt is found that remittances increase nondurable consumption, but not as much as local wages and that there is no difference in the impact on agricultural production spending between remittance and local wages. The large majority of remittances are reported by the households of non‐permanent migrants, suggesting that the fear of losing land allocations has a strong impact on migration decision.Originality/valueThe paper uses a large data set from three distinct provinces of China and is among the first to investigate the different types of remittance and their impacts on both consumption and production activities of Chinese rural households.

Remittances and well-being among rural-to-urban migrants in China

“…The preliminary results above confirm previous empirical findings of studies on China, i.e., that both motivations are at work (Secondi, 1997;Snyder and Chern, 2008). These results encourage us to explore whether such motivations transpire also when our SWB approach is used.…”

“…More recently, studies have explored this research question in the context of China. The main result of these studies suggest that the motivation behind remittances in China is mixed, since altruism alone is not capable of explaining their remittance behaviour (e.g., Secondi, 1997;Ma, 2001;Bai and He, 2002;Murphy, 2002;Feng and Heerink, 2008;Snyder and Chern, 2008). SWB and motivations behind remittances As a preliminarily check to identify which motivation dominates in our sample, we investigate -as in the standard approach -the relationship between the income (before remittances) of the family left behind and the level of remittances.…”

A Systematic Review on the Impact of Internal Remittances on Poverty and Consumption in Developing Countries: Implications for Policy

“…The effect of remittances on lowest income households in Thailand was also shown to be substantial with 85% of the poorest households reporting receiving remittances, compared with 34.2% of the wealthiest (Osaki, ). In China (Snyder and Chern, ), it was households from the middle income quartiles that were more likely to receive a remittance (40%), compared with 32% in the lowest quartile. Although Snyder and Chern () indicated that the cost of migration is a barrier for poorer households, such a conclusion is difficult to sustain as households were categorised according to whether they received a remittance not whether the household participated in migration.…”

“…In China (Snyder and Chern, ), it was households from the middle income quartiles that were more likely to receive a remittance (40%), compared with 32% in the lowest quartile. Although Snyder and Chern () indicated that the cost of migration is a barrier for poorer households, such a conclusion is difficult to sustain as households were categorised according to whether they received a remittance not whether the household participated in migration. We would like to add an important caveat; when income was further disaggregated by Snyder and Chern () into the lowest and highest decile, 25% of households in the lowest 10% reported receiving a remittance.…”

“…Although Snyder and Chern () indicated that the cost of migration is a barrier for poorer households, such a conclusion is difficult to sustain as households were categorised according to whether they received a remittance not whether the household participated in migration. We would like to add an important caveat; when income was further disaggregated by Snyder and Chern () into the lowest and highest decile, 25% of households in the lowest 10% reported receiving a remittance. These four studies were conducted in diverse contexts, on the basis of different sample sizes; however, a common finding is that remittances do reach a significant proportion of the poorest households.…”