ABSTRACT
The tremendous abundance of labour in rural areas is one of the most perplexing issues currently facing policy-makers in the People's Republic of China. Central and municipal authorities fear that large-scale labour movement out of rural China will have politically and socially destabilising effects on the cities and towns to which workers migrate. Recognising that there may be positive economic aspects associated with rural labour outflow, this research seeks to shed light on the transfer process with an emphasis on identifying the factors which motivate the observed frequent movement of migrants between their origin and destination points. Using household data collected in rural China, we investigate both out migration and return migration decisions. We demonstrate that observed migration patterns are the outcome of informed, rational responses to an environment filled with uncertainty and incomplete markets. To the extent that policymakers wish to minimise the more transient component of rural out-migration, attention must be paid to the underlying rural and urban institutions which give rise to the observed migration patterns.
