Do public work schemes deter or encourage outmigration? Empirical evidence from China

Abstract

How does the introduction of rural public work schemes impact individual incentives to migrate? This paper examines this question in the context of rural public work program (Yigong-daizhen) in China, and unveils empirical evidence that suggest that the introduction of Yigong-daizhen projects in fact stimulates outmigration at the village level, after controlling for village characteristics, project types and province fixed effects. By furthermore accounting for the endogeneity of Yigong-daizhen placement using propensity score matching method, the impact of such projects is found to be consistent with the OLS estimation. These results are consistent with household migration behavior in the presence of significant cost of migration, and credit market imperfection. JEL codes: H43; J61; O15