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Remittances and relative concerns in rural China

Journal article
Authors Alpaslan Akay
O. B. Bargain
C. Giulietti
J. D. Robalino
K. F. Zimmermann
Published in China Economic Review
Volume 37
Pages 191-207
ISSN 1043-951X
Publication year 2016
Published at Department of Economics
Pages 191-207
Language en
Keywords Positional concerns, Remittances, Subjective well-being, to-urban migrants, experienced utility, income-distribution, positional, concerns, panel-data, happiness, inequality, life, determinants, satisfaction, Business & Economics
Subject categories Economics and Business


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.

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