Examining the Relations between Household Saving Rate of Rural Areas and Migration

TL;DR

This study investigates how rural household migration in China affects saving rates, finding that migration is negatively associated with savings, contrary to initial assumptions, and controlling for various household characteristics.

Contribution

It applies OLS and instrumental variable methods to analyze the impact of migration on rural household savings, revealing a negative relationship.

Findings

Migration negatively affects household saving rates.

Other factors like education and health are also negatively related to savings.

The study challenges the assumption that migration increases savings.

Abstract

China has been developing very fast since the beginning of the 21st century. The net income of households has been increased a lot as well. Nonetheless, migration from rural areas to urban sectors tends to keep a high saving rate instead of consumption. This essay tries to use the conventional Ordinary Least Square regression, along with the method of Instrument Variable to test the problem of endogeneity, to discover the relationship between the saving rates of rural households and labor migration, controlling for other characteristic variables including having insurance, marital status, education, having children, health conditions. The assumption is that migration contributes positively to the dependent variable, meaning that migration could increase the household save rates. However, the conclusion is that it is negatively with the household save rates. All the other variables regarding education, health conditions, marital status, insurance, and number of children are negatively related with the household saving rates.