The Impact of Remittances on Rural Poverty and Inequality in China

Large numbers of agricultural labor moved from the countryside to cities after the economic reforms in China. Migration and remittances play an important role in transforming the structure of rural household income. This paper examines the impact of rural-to-urban migration on rural poverty and inequality in the case of Hubei province using the data of a 2002 household survey. Since remittances are a potential substitute for farm income, the paper presents counterfactual scenarios of what rural income, poverty, and inequality would have been in the absence of migration. The results show that, by providing alternatives to households with lower marginal labor productivity in agriculture, migration leads to an increase in rural income. In contrast to many studies that suggest the increasing share of non-farm income in total income widens inequality, this paper offers support for the hypothesis that migration tends to have egalitarian effects on rural income for three reasons: (i) migration is rational self-selection - farmers with higher agricultural productivities choose to remain in local agricultural production while those with higher expected return in urban non-farm sectors migrate; (ii) poorer households facing binding constraints of land shortage are more likely to migrate; and (iii) the poorest poor benefit disproportionately from remittances.

Bibliographic Details

Main Authors:	Zhu, Nong, Luo, Xubei
Language:	English
Published:	World Bank, Washington, DC 2008-05
Subjects:	ACCESS TO CREDIT, ACCESS TO JOBS, ACCESSIBILITY, AGRICULTURAL ACTIVITIES, AGRICULTURAL DEVELOPMENT, AGRICULTURAL ECONOMICS, AGRICULTURAL EMPLOYMENT, AGRICULTURAL MODERNIZATION, AGRICULTURAL PRODUCTION, AGRICULTURAL PRODUCTIVITY, AGRICULTURAL PRODUCTIVITY GROWTH, AGRICULTURAL TECHNOLOGIES, AGRICULTURAL WAGE, ALTERNATIVE EMPLOYMENT, ASSET ACCUMULATION, AVERAGE INCOME, BANK LOAN, BASIC EDUCATION, BASIC NEEDS, BRAIN DRAIN, BULLETIN, CAPITAL ACCUMULATION, CHANGING INCOME DISTRIBUTION, COLLECTIVE LAND, COMMERCIAL FARMING, COMPARATIVE ADVANTAGE, COUNTERFACTUAL, CREDIT MARKET, CULTURAL CHANGE, DECOMPOSABLE POVERTY MEASURES, DECOMPOSITION ANALYSIS, DEPENDANTS, DESCRIPTIVE STATISTICS, DEVELOPING COUNTRIES, DEVELOPING WORLD, DEVELOPMENT ECONOMICS, DIFFERENCES IN INCOME, DIVERSIFICATION, EARNINGS, ECONOMIC ACTIVITY, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC REFORM, ECONOMIC REFORMS, ECONOMIC RESEARCH, ECONOMIC STATUS, EDUCATION LEVEL, EMPIRICAL ANALYSIS, EMPIRICAL FINDINGS, EMPIRICAL LITERATURE, EMPIRICAL RESULTS, EMPLOYMENT OPPORTUNITIES, ENDOGENOUS VARIABLE, ENDOWMENTS, ENTRY BARRIERS, EQUALIZING IMPACT, EXPENDITURE, EXPLAINING INEQUALITY, FAMILIES, FAMILY MEMBERS, FARM ACTIVITIES, FARM ACTIVITY, FARM EMPLOYMENT, FARM INCOME, FARM INCOME GROWTH, FARM INCOMES, FARM PRODUCTION, FARM PRODUCTIVITY, FARM SECTOR, FARM SIZE, FARMER, FARMERS, FINANCIAL CONSTRAINTS, FOOD POLICY, FOOD SECURITY, GENDER, GINI COEFFICIENT, GRAIN PRODUCTION, GROWTH RATE, HIGHER EDUCATION LEVEL, HISTORICAL PERSPECTIVE, HOUSEHOLD ASSETS, HOUSEHOLD INCOMES, HOUSEHOLD LEVEL, HOUSEHOLD MEMBERS, HOUSEHOLD PER CAPITA INCOME, HOUSEHOLD POVERTY, HOUSEHOLD SIZE, HOUSEHOLD SURVEY, HUMAN CAPITAL, HUMAN DEVELOPMENT, INCIDENCE OF POVERTY, INCOME DISPARITIES, INCOME DISTRIBUTION, INCOME EQUATION, INCOME FLUCTUATIONS, INCOME GAINS, INCOME GAP, INCOME INCREASE, INCOME INEQUALITY, INCOME LEVEL, INCOME SHARE, INCOME SOURCE, INCREASE INCOME INEQUALITY, INCREASING SHARE, INDUSTRIALIZATION, INEQUALITIES, INEQUALITY, INEQUALITY MEASURES, INSURANCE, INSURANCE MARKET, INTERNAL MIGRATION, INTERNATIONAL BANK, INTERNATIONAL MIGRANT, INTERNATIONAL MIGRATION, JOB OPPORTUNITIES, LABOR FORCE, LABOR MARKET, LABOR MARKETS, LABOR MOBILITY, LABOR PRODUCTIVITY, LAND MARKET, LAND QUALITY, LAND SHORTAGE, LAND TENURE, LEVELS OF INCOME INEQUALITY, LIVING STANDARDS, LOCAL DEVELOPMENT, LOW INCOME, MEDIAN INCOME, MIGRANT, MIGRANT REMITTANCES, MIGRANT WORKERS, MIGRANTS, MIGRATION, MODERNIZATION, NATURAL RESOURCES, NEGATIVE SHOCKS, NONFARM INCOME, NORMAL DISTRIBUTION, NUMBER OF CHILDREN, NUMBER OF WORKERS, OPPORTUNITY COST, PHYSICAL CAPITAL, POLICY IMPLICATIONS, POLICY OPTIONS, POLICY REFORMS, POLICY RESEARCH, POLICY RESEARCH WORKING PAPER, POLICY REVIEW, POLITICAL ECONOMY, POOR, POOR AREAS, POOR GROWTH, POOR HOUSEHOLDS, POOR RURAL AREAS, POOR RURAL HOUSEHOLDS, POPULATION RESEARCH, POSITIVE EFFECT, POVERTY DATA, POVERTY HEADCOUNT, POVERTY INCIDENCE, POVERTY INDICES, POVERTY LINE, POVERTY LINES, POVERTY MEASURES, POVERTY REDUCTION, POVERTY SEVERITY, PRIVATE TRANSFERS, PROFITABILITY, PROGRESS, PUBLIC FACILITIES, RATE OF GROWTH, REAL INCOME, REGIONAL DIFFERENCES, REGIONAL INEQUALITY, REMITTANCE, REMITTANCES, REMITTANCES FROM MIGRANTS, RURAL, RURAL ACTIVITIES, RURAL AREA, RURAL AREAS, RURAL ASSET, RURAL DEVELOPMENT, RURAL ECONOMY, RURAL EMPLOYMENT, RURAL FARM, RURAL HOUSEHOLD, RURAL HOUSEHOLD INCOME, RURAL HOUSEHOLDS, RURAL INCOME, RURAL INEQUALITY, RURAL LABOR, RURAL MARKET, RURAL POOR, RURAL POOR HOUSEHOLDS, RURAL POVERTY, RURAL PRODUCTION, RURAL SECTOR, RURAL WORKERS, SAVINGS, SKILLED LABOR, SMALL BUSINESSES, SOURCE OF INCOME, SOURCES OF INCOME, SPATIAL MOBILITY, SUSTAINABLE DEVELOPMENT, TRANSPORTATION, URBAN AREAS, URBAN CENTERS, URBAN INFRASTRUCTURE, URBAN MIGRATION, VICIOUS CYCLE, VILLAGE, VILLAGES,
Online Access:	http://documents.worldbank.org/curated/en/2008/05/9478256/impact-remittances-rural-poverty-inequality-china https://hdl.handle.net/10986/6597
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