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Migration and Land Rental as Responses to Income Shocks in Rural C hina
Author(s) -
Ward Patrick S.,
Shively Gerald E.
Publication year - 2015
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/1468-0106.12072
Subject(s) - economics , shock (circulatory) , renting , covariate , household income , labour economics , demographic economics , econometrics , geography , medicine , archaeology , political science , law
Using longitudinal household survey data from rural C hina and an identification strategy based on observed rainfall realizations, we are able to test household responses to idiosyncratic and covariate income shocks. We find that negative idiosyncratic income shocks increase migration and elicit household out rental of land. The effect of covariate income shocks is generally dependent on both the timing and the nature of the shock. Our results suggest that rainfall deficiencies during paddy maturing or harvesting seasons reduce the number of migrants by raising the marginal value product of farm labour, thereby increasing the opportunity costs associated with migration.