Migration and Land Rental As Risk Response in Rural China
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Households in developing countries take various actions to smooth income or consumption as a means of managing or responding to risk. One of the principal means of smoothing income is through the diversification of income sources, including nonfarm employment and rural-urban migration. An important consumption smoothing
strategy involves the accumulation and depletion of assets. We examine migration and land rental market participation as responses to risk in rural China. Using a longitudinal data set comprised of households in nine provinces in China from 1991
through 2006, we are able to test for the effect of various manifestations of underlying idiosyncratic and covariate income risk on household responses. We find that covariate risks increase land rental market participation, but decrease participation
in migration. Idiosyncratic income risks do not affect household rental market participation,
perhaps suggesting that intra-village risk sharing is sufficient for households to smooth consumption after experiencing idiosyncratic shocks. Because the death of a household reduces a household’s redundant labor, these idiosyncratic labor shocks
significantly lower the likelihood that a household will participate in migration.
CONF
Agricultural & Applied Economics Association 2011 AAEA & NAREA Joint Annual Meeting
Ward, Patrick S.
Shively, Gerald E.
2011
Pittsburgh, Pennsylvania
1519