Social Insurance and Migration: Evidence from a Nation-Wide Institutional Reform in China

this paper examines the causal relationship between formal social insurance and individuals’ migration decisions. It exploits a quasi-experimental design in rural China, under which county officials were assigned to a group of villages (i.e., treated villages) to serve as village supervisors (VSs) for the local leaders. The study shows that this led to reduced favoritism in welfare allocation by the local leaders, thereby increasing the efficacy in the formal social insurance in the treated villages. It uses detailed geo-referenced administrative household-level data suited for a spatial regression discontinuity design (RDD) to obtain an average treatment effect (LATE) of the improved social insurance on migration. The apparent variation in the implementation of the reform across treated villages and heterogeneous impacts on different family clans make it possible to directly link changes in the efficacy of the insurance to migration choices. This study finds a large positive migration effect, of about 19%, for the young males and females. In turn, this led to a large boost in the average household’s income in just two years.