Urbanization and Risk Preference in the People's Republic of China: A Decomposition of the Self-Selection and Assimilation Effects
Shi, Xiaojun; Yan, Zhu | April 2017
Abstract
This paper argues that urbanization reshapes individual's risk preference by exerting self-selection and assimilation effects. Taking advantage of the unique hukou system in the People's Republic of China, we initiate a quasi-experiment method to elicit the two effects, employing the 2013-wave dataset of Chinese General Social Survey (CGSS). We find strong evidence supporting our two-effect theory and the magnitudes of both effects are sizable and near in scale. The assimilation effect reduces the migrant's risk aversion measurement by 0.606 while the self-selection effect reduces it by 0.715, on average. Overall, urbanization improves migrants' risk appetite, and mediated by this improvement, migrants are more likely to get engaged into the economic activities under uncertainty than their rural peers, as indicated by the evidence we have when applying the two-effect theory to investigate how households decide on risky financial asset investment.
Citation
Shi, Xiaojun; Yan, Zhu. 2017. Urbanization and Risk Preference in the People's Republic of China: A Decomposition of the Self-Selection and Assimilation Effects. © Asian Development Bank Institute. http://hdl.handle.net/11540/7060.Keywords
Urban Plans
Urbanism
Urban agriculture
Economic Development
Rural Urban Migration
Cities
Project impact
Development projects
Program management
Performance appraisal
Project appraisal
Technology assessment
Urbanization
Urban Services
Urban Projects
Urban Problems
Urban Poverty
Urban Policy
Urban Planning
Urban Infrastructure
Urban Health
Urban Government
Urban Economic Development
Urban Development Finance
Urban Development
Urban Conditions
Urban Communities
Urban Population
Results-Based Monitoring And Evaluation
Project Evaluation & Review Technique
Project Evaluation
Program Evaluation
Performance Evaluation
Operations Evaluation
Evaluation Methods
Evaluation
Local government
Urban renewal
Urban housing
Urban sociology
Transit systems
Rapid transit
Public transit
Mass transit
Cumulative effects assessment
Grievance procedures
Participatory monitoring and evaluation
Show allCollapse