Migration, Remittances, Poverty and Inequality in China: A Counterfactual Analysis

This article explores the impacts of migration and remittances on rural household income in China using cross-section data on rural household in the year 2007. The Heckman selection model is used to eliminate the selection bias and estimate the counterfactual income of migrant-sending household if there were no migration. The paper then goes on to compare the counterfactual income with the observed one and estimate the impact of migration on rural poverty and inequality. Results show that migration and remittances have a positive impact on the average rural household per capita net income. However, those who benefit the most from migration are the middle and upper classes rather than the poorest families, and the Gini coefficient even slightly increases. Besides, we find heterogeneity effects among provinces and the impacts also slightly change when different control groups are taken into consideration. In order to improve the rural household income and decrease poverty and inequality, more attention needs to be paid to the lowest income group and help them take part in internal migration.