Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/114043 
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers No. 9163
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
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 well-being functions to simultaneously explore the relative concerns with respect to income and remittances. Our results show that although rural households experience substantial utility loss due to income comparisons, they gain utility 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" with respect to remittances. The magnitudes of these two opposite effects are very similar, implying that the utility reduction due to relative income is compensated by the utility gain due to relative remittances. This finding is robust to various specifications, controlling for the endogeneity of remittances and selective migration, as well as a measure of current migrants' net remittances calculated using counterfactual income and expenditures.
Subjects: 
positional concerns
remittances
subjective well-being
JEL: 
C90
D63
Document Type: 
Working Paper

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