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

Abstract

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.