Precautionary Behavior, Migrant Networks, and Household Consumption Decisions: An Empirical Analysis Using Household Panel Data from Rural China

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Citation

Giles, John & Yoo, Kyeongwon (2007). Precautionary Behavior, Migrant Networks, and Household Consumption Decisions: An Empirical Analysis Using Household Panel Data from Rural China. The Review of Economics and Statistics, 89, 534-51.

Abstract

We develop a test of precautionary behavior in the consumption decisions of rural agricultural households. Among surveyed households facing a median level of consumption risk, 10% of savings can be attributed to a precautionary motive, and this increases to 15% for households with consumption per capita below the poverty line. We next use distant lags of local rainfall shocks uncorrelated with current consumption growth to identify the size of migrant networks outside the village, and then present evidence that both poor and nonpoor households engage in less precautionary saving as the size of the village migrant network increases.

URL

http://dx.doi.org/10.1162/rest.89.3.534

Reference Type

Journal Article

Year Published

2007

Journal Title

The Review of Economics and Statistics

Author(s)

Giles, John
Yoo, Kyeongwon