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Abstract Boosting the household consumption of migrants is an important way to expand domestic demand and promote sustainable growth in the process of urbanization. However, extensive literature shows that due to the constraints of the hukou registration system, rural-urban migrants do not have the expectation of living a long-term and stable life in the urban areas, thus leading to the fact that the role of migrants as consumers has not been brought into full play, and the improvement of the consumption structure has also been affected to some extent. As an important entry point for urban-rural integration, promoting the settlement of migrants in counties and creating conditions for their quality of life improvement through the urbanization of migrants is of great significance for social stability, economic development, and the overall progress of urbanization efforts. Based on the five rounds of the China Household Panel Survey from 2011 to 2017, this paper empirically analyzes the micro-mechanism of the impact of county-level urbanization of migrants on their household consumption, using manually collected texts on the reform of the hukou system and constructing an openness index of hukou registration at the county level as an instrument variable for the urbanization of migrants.
The main findings and conclusions of this paper are as follows. Overall, the urbanization of migrants in counties significantly enhances household consumption expenditure, specifically manifested in the increase of per capita consumption level and marginal propensity to consume among migrant households. Additionally, this increase in consumption expenditure also reflects a broader trend of economic integration and social cohesion within communities. However, consistent with the Relative Income Hypothesis, this paper does not find a significant impact of the urbanization of migrants on the average propensity to consume. From the perspective of the influencing mechanism, the enhancement of identity recognition, the increase in household income, and the reduction of income and expenditure uncertainty are important mechanisms for the increase in consumption. These mechanisms illustrate how social identity and economic stability contribute to more substantial consumer behavior among migrants. This paper further verifies the distance effect in identity recognition, namely that the consumption level of migrant households increases more as the geographical distance decreases. Heterogeneity analysis shows that the increase in household consumption is more pronounced among older migrants compared to the new generation, and in counties compared to urban districts, with more significant increases in households with smaller income and asset disparities.
This research provides a new perspective and evidence for understanding the consumption levels of Chinese migrant households. In the future, suppressing income and wealth inequality within counties and enhancing identity recognition after the urbanization of migrants will be of great importance for better connecting the expansion of domestic demand with the new urbanization strategy. To commit to improving household consumption levels after the urbanization of migrants, it is necessary to intensify efforts to promote the reform of the hukou system, especially in larger cities, to fully leverage the demand-driven role of identity recognition in increasing household consumption. On the other hand, it is necessary to further enhance the income levels of migrants, especially wage income, and to mitigate income and wealth inequality within counties to better leverage the role of income increase and reduced income disparities in boosting consumption. Finally, it is essential to focus on improving the social security system to reduce the uncertainties faced by migrant households, thereby increasing the consumption potential of households that have undergone hukou registration conversion and activating the large consumption market. Moreover, enhancing community support and integrating migrant families into local networks will further strengthen their economic participation and social stability, ultimately contributing to a more robust and inclusive domestic market.
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Published: 18 January 2025
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