53910 Internal Migration Benefits China's Rural Areas D o rural areas benefit when their residents Migration is positively associated with migrate to cities? A new national ID card household consumption and income growth and a program to facilitate legal temporary Poorer households experienced both higher con- residence in the cities have made migration easier sumption growth and more rapid income growth as for rural residents in China. Research on the effects the cost of migration fell, suggesting that migration of rural to urban migration in China shows a posi- from rural communities reduced inequality within tive relationship between consumption and income China's villages. The average income per capita of of households in migrant home communities, but no poorer households rose as they supplied more labor significant relationship between migration and invest- to productive activities, and acquired more land for ments in non-agricultural productive assets. The abil- agricultural production. ity to migrate is also associated with a drop in second- Migration also facilitated the accumulation of hous- ary school enrollment. ing wealth, consumer durables, and investments related to agricultural production, but there is little evidence Domestic migration is changing the nature of of more investments in assets for non-agricultural pro- China's labor market duction, a finding that is contrary to assertions in the China's Population Census figures show the number China literature and evidence from the literature on of migrants living outside their home counties for Mexico-U.S. migration. more than six months grew from 20 million in 1990 to 79 million by 2000. When temporary migrants are The ability to migrate is associated with a drop included (those residing away from home for one in secondary school enrollment month or more), the migrant population in 2006 At the average level of village participation in the mi- reached 132 million.1 grant labor market, a one-percent increase in the size of Internal migration--a potentially important mecha- the migrant labor force is associated with a fall of 0.18 nism for reducing poverty in rural areas--is being care- to 0.23 percent in the probability that a middle school fully studied using a unique panel of household data graduate will continue on to high school. from 88 villages across eight provinces.2 These panel This negative effect on high school enrollment survey data, collected by the Research Center for the Ru- is likely driven by signals of the low return to a high ral Economy (RCRE) at China's Ministry of Agriculture, were supplemented by a follow-up survey conducted by Bank researchers and RCRE during 2004. Figure 1. Percent of registered residents who live and work The annual RCRE household survey asks village outside their village and home county varies widely across leaders about migrants, and the number of registered villages in China village residents working and living outside the village. Share On average 3 percent of working age adults were mi- grants in 1987; by 2003 this had risen to 23 percent. The share of residents working as migrants varied consider- 0.6 ably across villages (see fig. 1). 0.4 Migration rose with the distribution of ID cards The timing of the ID card distribution can be used to es- timate the effects of migration on household well-being 0.2 and investment decisions. This distribution of ID cards facilitated mobility in China (and therefore migration flows) but was unrelated to other factors that could be 0 1987 1989 1991 1993 1995 1997 1999 2001 2003 affecting consumption, incomes, or household's invest- ment decisions (see fig. 2). Source: RCRE Village Surveys, 1987­2003. April 2008 econ.worldbank.org/research Figure 2. Share of migrants in village populations has risen Notes since national ID cards have been issued 1 For a useful discussion on measuring the size of the mi- grant population and authoritative estimates, see Fang Change in share of migrants in village population Cai, Albert Park, and Yaohui Zhao. 2007. "The Chinese 0.015 Labor Market in the Reform Era." In China's Great Eco- nomic Transformation, ed. Loren Brandt and Thomas G. Rawski, Cambridge University Press. The 2006 estimate 0.010 of the migrant population is drawn from the 2006 agri- cultural census, and reflects the number of migrants liv- ing outside their home counties for more than one month during the year. 0.005 2 Alan de Brauw and John Giles. 2008. "Migrant Labor Mar- kets and the Welfare of Rural Households in the Devel- oping World: Evidence from China." World Bank Policy 0 ­5 0 5 10 15 Research Working Paper 4585, April; Alan de Brauw and Years since ID cards issued John Giles. 2008. "Migrant Opportunity and the Educa- tional Attainment of Youth in Rural China." World Bank Source: RCRE Village Surveys, 1986­2003 and Supplementary Village Governance Survey, 2004. Policy Research Working Paper 4526, February. school education for migrants in urban areas. Al- Further Reading though migrant wages in cities are higher than wages Earlier work demonstrated that rural to urban migration for off-farm employment in rural areas, the marginal lowered exposure to income risk in rural China, and return for attending high school may be quite low for that households responded by engaging in less precau- migrants. Labor markets in China's cities tend to be tionary saving. segmented and migrants are typically employed in oc- John Giles. 2006. "Is Life More Risky in the Open? House- cupations that do not require much more than a junior hold Risk-Coping and the Opening of China's Labor high school education. Markets." Journal of Development Economics 81(1): Moreover, the returns to high school education may 25­60. be strongly linked to also completing college. Given the John Giles and Kyeongwoon Yoo. 2007. "Precautionary sharp increases in college tuition after 1996 and the lack Behavior, Migrant Networks and Household Con- of well-functioning financial aid or student loan pro- sumption Decisions: An Empirical Analysis Using grams in China, however, returns to high school educa- Household Panel Data from Rural China." The Review tion associated with later completion of college may be of Economics and Statistics 89(3): 534­51. falling in rural areas where the probability of entering college is already low. John Giles, Senior Labor Economist jgiles@worldbank.org Human Development and Public Services Research econ.w Human Development and Public Services Research econ.worldbank.org/programs/hd_and_public_services