The impact of remittance income on rural households in China

Purpose – The objective of this paper is to evaluate the impact of remittance income on rural households in China. Design/methodology/approach – Using data from a large survey of farming households in three Chinese provinces, the impacts of remittances and other types of income on consumption, production expenditures is evaluated. The econometric models used in this study include logit, tobit and ordinary least squares models. Findings – It is found that remittances increase nondurable consumption, but not as much as local wages and that there is no difference in the impact on agricultural production spending between remittance and local wages. The large majority of remittances are reported by the households of non-permanent migrants, suggesting that the fear of losing land allocations has a strong impact on migration decision. Originality/value – The paper uses a large data set from three distinct provinces of China and is among the first to investigate the different types of remittance and their impacts on both consumption and production activities of Chinese rural households.