Migration and the Reshaping of Consumption Patterns

Lead Research Organisation: University of Southampton
Department Name: School of Social Sciences

Abstract

Internal migration in China has rapidly increased in the past thirty years. Fuelled by the reforms initiated at the end of 1970s, the largest move of labour force in history started taking place, with an enormous amount of individuals temporarily leaving rural areas to work in urban areas attracted by better economic conditions. Not only the Great Migration is an important aspect of the recent economic paradigm of China, but is also playing a crucial role in the international context. A large share of the global demand over the past decades has been sustained by the shift of the Chinese labour force out of the agricultural sector into the export-oriented manufacturing and tertiary sectors in urban areas. On parallel, international migration to Europe has been growing in the past twenty years, also triggered by increasing economic integration with developing countries. In particular the Chinese diaspora has been growing, with many young talented Chinese migrants moving to countries such as France, the UK and Germany to further their education in disciplines in which Europe typically has a scarce supply.
In this context, our proposed project aims at investigating how migration reshapes the consumption patterns of migrants and other individuals indirectly affected by migration, with particular attention to implications in terms of consumption inequality. Our focus is on both the Great Migration in China and the Chinese diaspora in the EU.
While there is a wealth of studies analysing the consequences of migration on labour market outcomes, systematic evidence is missing on how consumption, consumption behaviour and consumption inequality are affected by migration. We aim at filling this gap by answering the following three research questions:
a) What is the impact of the Great Migration on consumption patterns?
b) What are the relationships between institutions, population change and consumption behaviour?
c) Does migration lead to the transfer of consumption norms?
Research shows that consumption is an ideal measure for capturing permanent income and thus for predicting long-run economic well-being. In the first research question we focus on studying how migration affects consumption of migrants before, during and after migration, as well as consumption of individuals who are indirectly affected by migration (family left behind and urban residents).
With the ageing of the population and the shrinking of the working-age population in China many individuals will have to adapt their behaviour in terms of how much they can currently consume and how much should be saved for future consumption. Housing is a key asset that is expected to be affected by such a trade-off. Our second research question investigates what migration has to do with housing demand and housing prices, as well as how housing affects the consumption of remaining goods.
We devote the third research question to understand whether and how migration leads to a transfer of consumption norms from destination to sending areas. Migrant workers living in urban areas are increasingly exposed to the city life style, absorbing the consumption behaviour of urban residents. Similarly, many young Chinese migrants learn about European values and norms during their permanence, and such exposure is likely to determine a transfer of consumption behaviour back to China, channelled through the use of new technology, media and social networks.
The ultimate goal of our research is to inform policy about how migration can affect consumption behaviour and consumption inequality, so that disparities and social instability can be prevented, and consumption - to the extent that it promotes growth and increases well-being - can be fostered.

Planned Impact

Our project will focus on the role played by migration in changing consumption patterns and behaviour. It aims to highlight the role of various drivers, in addition to migration and demographics concerning consumption patterns and behaviour, potentially leading to inequality. The rising inequality in China is of a concern for the country's policy makers. At the same time, the changing patterns of Chinese consumption also hold importance for Europe and the rest of the world, with implications for world prices through increased demand for goods. Hence, our project will help shedding light on an important and policy relevant issue that has global relevance.
The findings from our project could be of potential use to several groups, including: (i) policy makers and planners, locally and nationally within China, since our research can suggest evidence-based policy prescriptions aimed at reducing inequality and increasing well-being; (ii) the third sector, especially charity and voluntary organisations, since our research can shed light on the role of migration on affecting altruistic behaviour; and (iii) international organisations, since our research can provide relevant insights for policy makers and planners concerned with migration and development policies.
In addition, our research is expected to directly benefit the following stakeholders: (iv) migrants and non-migrants in China, since our findings can have important policy implications for consumption inequality, ultimately contributing to improving their quality of life, health and well-being; (v) immigrants from China living abroad, and in particular student migrants, as our research can enhance the knowledge on the role played by migration in norm transfers relative to other channels such as social media and peer effects; (v) consumers worldwide, since our findings can suggest evidence-based policy to e.g. mitigate negative impacts from migration that result in higher prices; and (vi) the general public, since our research focus on the global challenges of migration and consumption can help to tackle the narrow and stereotyped European view of China, as well as providing a more informed picture of Europe and its values and culture among the Chinese public.
We have given careful consideration to the pathways to maximise the impact of the proposed project, both within China and internationally. We plan to engage with users and beneficiaries throughout the project's lifetime and beyond. We also plan to monitor the effectiveness of our impact activities to ensure the success of our engagement plan through keeping track of citations in non-academic and policy publications, interactions with policy makers and officials, the number of downloads of policy briefs, as well as invitations to expert meeting and talks.

Publications

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Giovanni Facchini, (2019) China's "Great Migration'': The impact of the reduction in trade policy uncertainty in Journal of International Economics

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Facchini G (2015) Lobbying Expenditures on Migration: a Descriptive Analysis in CESifo Economic Studies

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Démurger S (2016) Remittances and expenditure patterns of the left behinds in rural China in China Economic Review

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Akay A (2016) Remittances and relative concerns in rural China in China Economic Review

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Démurger S (2016) Remittances and expenditure patterns of the left behinds in rural China in China Economic Review

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Giulietti C (2018) Strong versus weak ties in migration in European Economic Review

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Combes P (2020) Unequal migration and urbanisation gains in China in Journal of Development Economics

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Facchini G (2019) China's "Great Migration": The impact of the reduction in trade policy uncertainty in Journal of International Economics

 
Description This project brought together collaborations across 6 institutions in France (Groupe d'Analyse et de Théorie Economique Lyon-Saint-Etienne (GATE)), Germany (Institute for Labor Economics (IZA)), the UK (University of Southampton and University of Nottingham) and China (Beijing Normal University (BNU) & Chinese Academy of Social Sciences (CASS)). Each institution is funded by its respective national Research Council.
The first important outcome of this project has been establishing and developing collaborative research among researchers from the UK, France, Germany and China. The project enabled the teams to build and extend existing research collaborations. This project has enabled knowledge exchange of methods, data resources, literature and analytical skills.
One of the main outcomes of this project has been developing a unique online survey of students in China (MARCO_P survey). This survey sheds light on how migration influences consumption. It allows comparing consumption behaviour between students coming from different provinces of China and how it evolves over time (e.g., by comparing students in different cohorts). The data collection was funded through the DFG budget allocated to IZA (Germany). The MARCO_P survey data will be deposited at the IDSC, the Research Data Center of IZA , though we will have a link for public access through UK Data Service.
While we were able to secure a satisfactory response rate from students who were present in the Universities where we conducted the survey, a very small number of Chinese students who were studying overseas at the time of the survey participated. This limits the quantitative analysis that one could perform using the sample of international students (e.g. comparing their consumption behaviour before or after returning to China), albeit interesting qualitative comparisons with other students (i.e. those who did not migrate are still feasible. Importantly, our data still allow us to study the link between migration and consumption by looking at regional migration within China or by linking consumption behaviour with national/international migration intentions.
The project has also enabled us to improve our understanding of the role played by migration. Here is a summary of our main findings:
1. Research question "What is the impact of the Great Migration on consumption patterns?". Our key findings are:
a. Remittances supplement income in rural China and lead to increased consumption rather than increased investment. This effect is stronger for non-poor households. Households who receive remittances allocate a small share of their budget to education purposes
b. At the same time, remittances may also change the income distribution and the relative income position of households within the sending village. Yet, the effect of migration on inequality not only concerns income and consumption but also subjective well being of the left behind
c. Migrant households with school-age children earn less than migrant households whose children are left behind in the place of origin.
2. Research question "Does migration lead to the transfer of consumption norms?" Focusing on urban-to- urban migration in China, our key findings are:
a. Having a migrant member increases the probability that left-behind households participate in the stock market which is mainly driven by current migrants (rather than returnees) and by the effects of migration on male-headed households, households headed by educated members and relatively richer households.
b. Rural-urban returnees in China are more likely to smoke and drink alcohol compared to non-migrants and relative to before migrating.
c. Weak ties are complementary to strong ties in driving rural-urban migration in China.
3. Research question "What are the relationships between institutions, population change and consumption behaviour? Our key finding is:
a. In the context of studying the changes in internal migration rates triggered by the reduction in trade policy uncertainty faced by Chinese exporters in the U.S., we find that prefectures facing the average decline in trade policy uncertainty experience an 18 percent increase in their internal in-migration rate -- this result is driven by migrants who are ``non-hukou", skilled, and in their prime working age. In those prefectures, working hours of ``native'' unskilled workers significantly increase, while the employment rates of neither native workers nor internal migrants change.
b. When deciding to migrate, rural-urban migrants maximize utilities from consumption and urban amenities and as a consequence rural-urban migrants strongly prefer cities with larger populations as destination.
Exploitation Route Our findings and data on Chinese students' consumption patterns, are important in showing the role played by exposure to different norms and education on consumption. Those findings will be disseminated further to provide better evidence for policymakers interested in migration and consumption.
Sectors Agriculture, Food and Drink,Communities and Social Services/Policy,Government, Democracy and Justice,Other

 
Description Our research shows the potential costs and benefits of internal migration in China and has contributed to the evidence base on how consumption, consumption behaviour and consumption inequality are affected by migration. As such, our findings are of paramount importance to policymakers interested in the well-being of migrants and non-migrants. Our project has had three main impacts: 1) Contributed to Knowledge Exchange and Capacity Building: this project has enabled several teams of researchers in six institutions across Europe and China to collaborate, exchange knowledge and build new expertise. It has also enabled young researchers from China to visit European institutions and vice versa whereby widening their experience of the culture and society, as much as their knowledge base. 2) Developed new and unique data set on Chinese students in China: this new resource, which is publicly available, has very rich information on consumption behaviour of Chinese students coming from different provinces of China. It also includes questions on migration intentions, allowing the study of how the migration decision forms. The data set enriches the publicly available evidence base on the role of internal migration on consumption patterns of young people in China. 3) Provided insights and informed the debate on the implications of internal migration in China. Members of the team provided FAO with background study on internal migration and rural development, which fed into their report The State of Food and Agriculture 2018: Migration, agriculture and rural development (2018). The team also prepared a paper on the role of migration in enhancing cities productivity for the Asian Development Bank conference on Urban and Regional Development in Asia, which was attended by policymakers. Our results contributed to the debate on how cities play a significant role in driving economic development and offering better lives, but might also fuel increasing inequality between rural and urban areas in China. In addition, Prof Li Shi through his membership of the Advisory Committee of the Ministry of Human Resources and Social Security and the Advisory Committee of the Poverty Alleviation Office of the State Council of China, was able to feed through directly our results to national policymakers, and contribute rigorous evidence on inequality and migration in China.
Sector Other
Impact Types Societal,Economic,Policy & public services

 
Title Online Chinese Students Survey (Marco_P Survey) 
Description This survey is a longitudinal online survey which has been administered to students enrolled in two Chinese universities who are studying in China or are abroad attending an exchange program. Two universities participated in the survey: the Beijing Normal University (BNU) and the University of Nottingham at Ningbo (UNN). The survey is composed by six modules (A-F) in which the respondents are asked questions on a broad variety of topics, such as personal and parental Information, consumption habits, networks, migration attitudes, preference and satisfaction. 
Type Of Material Database/Collection of data 
Year Produced 2019 
Provided To Others? Yes  
Impact This survey sheds light on how migration influences consumption. It allows comparing consumption behaviour between students coming from different provinces of China and how it evolves over time (e.g., by comparing students in different cohorts). 
URL https://dx.doi.org/10.5255/UKDA-SN-853515
 
Description China Research Centre 
Organisation University of Southampton
Department Faculty of Social, Human and Mathematical Sciences
Country United Kingdom 
Sector Academic/University 
PI Contribution Head the migration and labour market theme.
Collaborator Contribution Bring together researchers working on China- inter-disciplinary centre.
Impact multi-disciplinary collaboration
Start Year 2015
 
Description PERSPECTIVES ON GLOBAL DEVELOPMENT 2016: International migration in a shifting world, Second Expert Meeting 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact This meeting was discussing the OECD draft report on international migration. The discussion will shape the contents and drafting of the final report.
Year(s) Of Engagement Activity 2016