Do Migrants Really Save More? Understanding the Impact of Remittances on Savings in Rural China

This article studies the impact of remittances on the savings behaviour of rural households in China, using a primary survey undertaken by the authors in 2006. Allowing for endogeneity and left-censoring of remittances, we find that the marginal propensity to save out of remittances is well below half of that out of other sources of incomes. Moreover, we find no evidence of any direct effect of remittances on either capital input or gross output of farm production. These findings are robust with respect to alternative definition of savings and are in line with recent studies which conclude that remittances are largely used for consumption purposes by rural Chinese households.