Is Life More Risky in the Open? Household Risk-Coping and the Opening of China's Labor Markets

This paper looks at the effect of access to off-farm employment opportunities on household exposure to unexpected shocks originating in the agricultural economy. Farm households with improved access to both migrant and local labor markets are better able to cope with shocks to agricultural production. The risk-coping benefits of improved access to off-farm markets are not shared evenly within or across villages. Wealthier households show a more pronounced reduction in exposure to shocks, including less variable income and consumption, and a reduced impact of production shocks on expenditures related to the education of children.

A control function approach to estimating dynamic probit models with endogenous regressors, with an application to the study of poverty persistence in China

This paper proposes a parametric approach to estimating a dynamic binary response panel data model that allows for endogenous contemporaneous regressors. This approach is of particular value for settings in which one wants to estimate the effects of an endogenous treatment on a binary outcome. The model is next used to examine the impact of rural-urban migration on the likelihood that households in rural China fall below the poverty line. In this application, it is shown that migration is important for reducing the likelihood that poor households remain in poverty and that non-poor households fall into poverty. Furthermore, it is demonstrated that failure to control for unobserved heterogeneity would lead the researcher to underestimate the impact of migrant labor markets on reducing the probability of falling into poverty.Rural Poverty Reduction,Population Policies,Achieving Shared Growth,Debt Markets,Regional Economic Development

Forecasting the PSBR outside government: the IFS perspective

Expectations regarding the future state of the public finances are vital for public policy formation. The UK experience has been that forecasts of the PSBR have been beset with problems since the mid-1980s. Independent assessments of the accuracy and plausibility of public finance forecasts are an important check on government forecasts and serve to increase public debate over government finance issues. We examine the success of various possible methods available to those outside government.

The Evolution of Income Inequality in Rural China

We document the evolution of the income distribution in rural China, from 1987 through 1999, with an emphasis on investigating increases in inequality associated with transition and economic development. With a backdrop of perceived improvements in average living standards, we ask whether increases of inequality may have offset, or even threaten welfare gains associated with economic reforms. The centerpiece of the paper is an empirical analysis based on a set of household surveys conducted by the China’s Research Center for Rural Economy (RCRE) in Beijing. These surveys permit us to construct a set of comparable estimates of household income and consumption from a panel of over 100 villages from nine Chinese provinces. We provide a variety of summary statistics, including Gini coefficients, as well as more nonparametric summaries of the income distribution (i.e., Lorenz curves). In addition, we decompose the sources of inequality, exploring the contributions of spatial inequality to overall inequality, and the role of non-agricultural incomes in explaining rising dispersion of incomes. We find that the distribution of income improved by most measures during the early part of the period, as average incomes rose substantially with only a modest increase in inequality. However, the distribution has worsened significantly since 1995, with rising inequality, and falling absolute incomes, especially at the bottom end of the income distribution. We attribute most of the recent decline in welfare to collapsing agricultural incomes, probably brought about by lower farm prices. At the same time, increasing non-farm incomes have widened the gaps between those with and without access to nonagricultural opportunities. Based on explorations with different data sets, our RCRE-based results probably understate the divergence due to non-agricultural income growth and the increase in inequality over time. Our results highlight the need for further evaluation of the role of farming as a source of income in the countryside, and also underline the limitations of a land-based (and essentially grain-based) income support and redistribution mechanisms.http://deepblue.lib.umich.edu/bitstream/2027.42/40040/3/wp654.pd

How has Economic Restructuring Affected China’s Urban Workers?*

Using data from the China Urban Labor Survey conducted in five large Chinese cities at year end 2001, we quantify the nature and magnitude of shocks to employment and worker benefits during the period of economic structuring from 1996 to 2001, and evaluate the extent to which adversely affected urban workers had access to public and private assistance. Employment shocks were large and widespread, and were particularly hard on older workers and women. Unemployment reached double digits in all sample cities and labor force participation declined by 8 percent. Urban residents faced modest levels of wage and pension arrears, and sharp declines in health benefits. Public assistance programs for dislocated workers had limited coverage, with most job-leavers relying upon private assistance to support consumption, mainly from other household members.http://deepblue.lib.umich.edu/bitstream/2027.42/40014/3/wp628.pd

Migrant Opportunity and the Educational Attainment of Youth in Rural China

In this paper, we investigate how reductions of barriers to migration affect the decision of middle school graduates to attend high school in rural China. Change in the cost of migration is identified using exogenous variation across counties in the timing of national identity card distribution, which make it easier for rural migrants to register as temporary residents in urban destinations. We make use of a large panel household and village data set supplemented by an original follow-up survey, and find a robust negative relationship between migrant opportunity and high school enrollment. This effect is consistent with our finding of low returns to high school education among migrants from surveyed villages.Migration, Educational Attainment, Rural China

Migrant labor markets and the welfare of rural households in the developing world : evidence from China

In this paper, the authors examine the impact of reductions in barriers to migration on the consumption of rural households in China. The authors find that increased migration from rural villages leads to significant increases in consumption per capita, and that this effect is stronger for poorer households within villages. Household income per capita and non-durable consumption per capita both increase with out-migration, and increase more for poorer households. The authors also establish a causal relationship between increased out-migration and investment in housing and durable goods assets, and these effects are also stronger for poorer households. The authors do not find robust evidence, however, to support a connection between increased migration and investment in productive activity. Instead, increased migration is associated with two significant changes for poorer households: increases both in the total labor supplied to productive activities and in the land per capita managed by the household. In examining the effect of migration, we pay considerable attention to developing and examining our identification strategy.Access to Finance,Population Policies,Economic Theory&Research,Labor Policies,Debt Markets

Migrant opportunity and the educational attainment of youth in rural China

This paper investigates how reductions of barriers to migration affect the decision of middle school graduates to attend high school in rural China. Change in the cost of migration is identified using exogenous variation across counties in the timing of national identity card distribution, which made it easier for rural migrants to register as temporary residents in urban destinations. The analysis first shows that timing of identification card distribution is unrelated to local rainfall shocks affecting migration decisions, and that timing is not related to proxies reflecting time-varying changes in village policy or administrative capacity. The findings show a robust negative relationship between migrant opportunity and high school enrollment. The mechanisms behind the negative relationship are suggested by observed increases in subsequent local and migrant non-agricultural employment of high school age young adults as the size of the current village migrant network increases.Access to Finance,Population Policies,Education For All,Tertiary Education,Secondary Education

Migrant Labor Markets and the Welfare of Rural Households in the Developing World: Evidence from China

In this paper, we examine the impact of reductions in barriers to migration on the consumption of rural households in China. We find that increased migration from rural villages leads to significant increases in consumption per capita, and that this effect is stronger for poorer households within villages. Household income per capita and non-durable consumption per capita both increase with out-migration, and increase more for poorer households. We also establish a causal relationship between increased out-migration and investment in housing and durable goods assets, and these effects are also stronger for poorer households. We do not find robust evidence, however, to support a connection between increased migration and investment in productive activity. Instead, increased migration is associated with two significant changes for poorer households: increases both in the total labor supplied to productive activities and in the land per capita managed by the household. In examining the effect of migration, we pay considerable attention to developing and examining our identification strategy.Migration, Migrant Networks, Consumption, Poverty, Wealth, Rural China, Community/Rural/Urban Development, Consumer/Household Economics, Labor and Human Capital, O12, O15, J22, J24,