Access to Markets and Household Consumption: Evidence from Rural China

41 Pages Posted: 10 Jul 2008

See all articles by M. Shahe Emran

M. Shahe Emran

George Washington University - Department of Economics

Zhaoyang Hou

China Economic Research Center, Stockholm School of Economics

Date Written: July 10, 2008

Abstract

This paper presents evidence on the effects of access to domestic and international markets on per capita consumption of households using data from rural China. The econometric analysis uses alternative identification schemes to address the potential endogeneity of access to markets. Motivated by the transport engineering literature, we exploit topography of the other counties along the linear distances to the markets as the source of exogeneous variations. We also use identification through heteroskedasticity which does not rely on any exclusion restrictions. The results from alternative identification schemes show that (i) better access to both domestic and international markets has positive effects on per capita consumption, (ii) the domestic market effect is significantly larger in magnitude and (iii) there is complementarity between the access to domestic and international markets.

Keywords: Access to Markets, Household Consumption, Domestic Market, International Market, Rural Poverty, China

JEL Classification: O12, O16

Suggested Citation

Emran, M. Shahe and Hou, Zhaoyang, Access to Markets and Household Consumption: Evidence from Rural China (July 10, 2008). Available at SSRN: https://ssrn.com/abstract=1157912 or http://dx.doi.org/10.2139/ssrn.1157912

M. Shahe Emran (Contact Author)

George Washington University - Department of Economics ( email )

2115 G Street NW
302 Monroe Hall
Washington, DC 20052
United States

Zhaoyang Hou

China Economic Research Center, Stockholm School of Economics ( email )

PO Box 6501
Stockholm, 11383
Sweden

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