Temporary versus permanent migration: The impact on expenditure patterns of households left behind
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Temporary versus permanent migration: The impact on expenditure patterns of households left behind Chuhong Wang
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Xingfei Liu2 Zizhong Yan3 ●
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Received: 27 May 2019 / Accepted: 29 August 2020 © Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract In this paper we investigate whether adult children’s internal migration influences expenditure behaviour of households left behind in rural China, and how this impact differs among different types of migrants. Exploiting unique hukou information from the China Health and Retirement Longitudinal Study, we explicitly distinguish between temporary and permanent migration. To deal with the endogeneity of migration, we implement an instrumental variable approach. Our results reveal remarkably distinct effects on household expenditure patterns depending on whether children migrate temporarily or permanently to urban areas. Households with temporary migrant children spend more on one key consumption good—food—and invest less. In contrast, permanent migration of children exerts no impact on household consumption but increases productive investment. Therefore, policymakers should view permanent migration as a potential pathway to foster local economic development. Keywords Temporary and permanent migration Expenditure Hukou Remittances ●
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JEL classification O15 R23 O53 D13 ●
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1 Introduction The literature concerning the impact of migration and remittances on expenditure patterns of migrant-sending households is growing. An important strand of this literature has examined the different roles played by external and internal remittances (Castaldo and Reilly 2007; Adams and Cuecuecha 2010b; Clément 2011; Randazzo
* Chuhong Wang fl[email protected] 1
Yango University, Fuzhou, China
2
University of Alberta and IZA, Edmonton, AB, Canada
3
Jinan University, Guangzhou, China
C. Wang et al.
and Piracha 2019). Despite the fact that these studies provide mixed results, they all highlight the importance of taking into account different sources of remittances in the analysis of household expenditure patterns. In the same spirit, we believe that another fruitful perspective taken on this issue consists of distinguishing the effect according to the type and purpose of migration, for instance, whether migrate temporarily to accumulate savings to be used at home upon return to improve household living standards, or migrate permanently to start a new and typically more promising life in another place. There is very little economic evidence that the expenditure behaviour of left behind households is disproportionately affected by having temporary versus permanent migrants, and much remains to be unravelled in this regard. To our knowledge, no study has been done in the economics literature to look at specifically how types of migration affect expenditures of the left-behind household. Clearly, temporary migrants differ substantially from permanent migrants with respect to motivation, duration, skill intensity, employment type, commitment
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