Remittances and Expenditure Patterns of the Left Behinds in Rural China

Abstract

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The Influence of Remittances on Mutual Transactions in an Isolated Village

“…Similar findings have been reached on Guatemala (Adam & Cuecuecha 2010), Mexico (Taylor & Mora 2006;Amuedo-Dorantes & Pozo 2011). Démurger, S., & Wang, X. (2016) use data from the rural-urban migration in China survey, assess the impact of remittances sent to rural households on consumption-type and investment-type expenditures and they find that remittances supplement income in rural China and lead to increased consumption rather than investment.…”

“…In the developing world, remittances make a direct contribution to increasing income of the families left behind, and as such they contribute to easing budget constraints of the poorest, reducing poverty and improving average living conditions (Acosta, Calderon, Fajnzylber, & Lopez 2008). A pessimistic view argues that remittances may leave investment decisions unchanged if they are spent on status-oriented, conspicuous consumption, and as such they may have little impact on local economies (Démurger & Wang 2016). A more optimistic view argues that remittances are a transitory source of income for families left behind, and are therefore invested, at the margin, rather than consumed.…”

“…Remittances seem to have a stronger effect in countries receiving small amounts and in countries with a larger share of its population working abroad. Démurger, S., & Wang, X. (2016), Nguyen, D.L., et al (2017) find the evidence of a strong negative impact of remittances on education expenditure, which could be detrimental to sustaining investment in human capital in poor rural areas in China.…”

Consumption Structure of Migrant Worker Families in China

“…It is not surprising that they display a consumption pattern similar to that of urban low-income groups (Cheng et al, 2002;Zhang and Hao, 2010;Zheng and Henneberry, 2010). In their rural hometowns, however, they are among the richest groups, but rarely have the opportunity to show their wealth (Ravallion and Chen, 2007;Démurger and Wang, 2016;Ha et al, 2016). In addition, children in migrant worker families are prevented from entering schools in cities.…”

Children Left Behind in China: The Role of School Fees

“…Estimation results indeed suggest that 10% increase in school fees results in an increase of between 241 and 304 yuan in the annual remittances (Table 3.22 in the online Appendix 3). However, greater remittances may not necessarily result in better outcomes for LBCs; a recent study by Démurger and Wang (2016) points to a strong negative impact of remittances on education expenditures in remittances-receiving households as remittances lead to increased consumption, possibly at the expense of investments.…”