Large numbers of agricultural labor moved from the
countryside to cities after the economic reforms in China.
Migration and remittances play an important role in
transforming the structure of rural household income.
This paper examines the impact of rural-to-urban
migration on rural poverty and inequality in the case
of Hubei province using the data of a 2002 household
survey. Since remittances are a potential substitute for
farm income, the paper presents counterfactual scenarios
of what rural income, poverty, and inequality would
have been in the absence of migration. The results show
that, by providing alternatives to households with lower
marginal labor productivity in agriculture, migration
This paper is a product of the Poverty Reduction and Economic Management Department, East Asia and Pacific Region.
Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The author may be contacted
at xluo@worldbank.org.
leads to an increase in rural income. In contrast to many
studies that suggest the increasing share of non-farm
income in total income widens inequality, this paper
offers support for the hypothesis that migration tends
to have egalitarian effects on rural income for three
reasons: (i) migration is rational self-selection – farmers
with higher agricultural productivities choose to remain
in local agricultural production while those with higher
expected return in urban non-farm sectors migrate; (ii)
poorer households facing binding constraints of land
shortage are more likely to migrate; and (iii) the poorest
poor benefit disproportionately from remittances