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Abstract

The paper analyzes the decision-making of rural Chinese households with three alternatives: stay exclusively on farm, take local off-farm jobs, and migrate. Based on a survey of rural Chinese households, we extend the dynamic discrete choice model of Wooldridge (2002a,b) to a trichotomous setting and apply it to a five-year panel study. We observe statistically significant state dependence between the current period response and decisions of the previous time period. We also conclude that education, household size, and social networks play important roles in job-location decision-making of rural Chinese households.

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