Remittances and relative concerns in rural China

TitleRemittances and relative concerns in rural China
Publication TypeJournal Article
Year of Publication2016
AuthorsAlpaslan Akay, Olivier Bargain, Corrado Giulietti, Juan D. Robalino and Klaus F. Zimmermann
JournalChina Economic Review
Date Published2016-02
ISSN1043-951X (print) / 1873-7781 (online)

The paper investigates the impact of remittances on the relative concerns of households in rural China. Using the Rural to Urban Migration in China (RUMiC) dataset we estimate a series of subjective well-being functions to simultaneously explore relative concerns with respect to income and remittances. Our results show that although rural households experience substantial welfare loss due to income comparisons, they gain well-being by comparing their remittances with those received by their reference group. In other words, we find evidence of a “status effect” with respect to income and of a “signal effect” of similar magnitude with respect to remittances. This finding is robust to various specifications, alternative reference group definitions, controls for the endogeneity of remittances and selective migration, as well as the use of migrants' net contribution to household income.

Alternate JournalSpecial Issue on Human Capital, Labor Markets, and Migration