Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/203417
Authors: 
Howell, Anthony
Year of Publication: 
2019
Series/Report no.: 
ADB Economics Working Paper Series 575
Abstract: 
This paper relies on recent proprietary data from the People's Republic of China's (PRC) poor rural minority areas to examine the importance of credit constraints on internal labor migration. Specifically, a liquidity shock via the PRC's minimum living standard assistance (MLSA) program is decomposed into its direct and indirect parts. The institutional features of the MLSA program permit an identification strategy that relies on a set of verifiable assumptions and an instrument variable framework. The results reveal that the direct effect on migration of MLSA is negative, although the net effect is positive driven by the large indirect effects, which are twice as large for ethnic minorities compared to the Han majority. Subsequent evidence further suggests that the main mechanism behind the indirect effect is informal interpersonal lending fostered by risk-sharing strategies. The findings imply that once liquidity is injected into a village it gets circulated in the community, stimulating migration particularly within credit-constrained minority communities.
Subjects: 
ethnicity
indirect effect
liquidity constraints
migration
risk-sharing mechanisms
targeted cash transfers
JEL: 
C21
J18
J61
R23
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by/3.0/igo/
Document Type: 
Working Paper
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