Rural-Urban Migration and Rural Inequality in China
Ahmad, Mohammad Taimur Ali
Rural-urban inequality in China has been increasing over the past few decades, with the prospects of higher wages in urban centers leading to mass rural-urban migration. I examine how rural inequality affects the household decision to invest in domestic migration. I capture the effect of inequality with two measures of relative deprivation and find that ordinal relative deprivation pushes households to invest in migration. I also estimate the impact of rural-urban migration on rural inequality in China. Considering that remotely-earned income is a substitute for income that would have otherwise been locally earned, a counterfactual income distribution is simulated using quantile regressions. Inequality, defined as the gap between the 80th and 20th percentiles, is measured in the two distributions and used to check whether inequality would have been higher without migration. I find that inequality would be higher in the counterfactual without migration, and would be lower in the counterfactual where all households have field a migrant.
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