it reflects factors affecting both change in demand for migrant labor and change in labor supply decisions of migrants and potential migrants. Disruptions to the local economy, for example, decrease household consumption per capita while increasing the relative return to migrant employment in more distant locations, potentially leading to an observed negative relationship between increases in migration and consumption growth. To identify the effect of migration on consumption, it is necessary to find an instrument that is correlated with the share of village residents working as migrants, but otherwise unrelated to factors affecting growth or negative shocks experienced by the village.

To instrument for migration, we make use of two policy changes that, working together, affect the strength of migrant networks outside home counties but are plausibly unrelated to average village consumption growth. First, a new national ID card (shenfen zheng) was introduced in 1984. While urban residents received IDs in 1984, residents of most rural counties did not receive them immediately. In 1988, a reform of the residential registration system made it easier for migrants to gain legal temporary residence in cities, but a national ID card was necessary to obtain a temporary residence permit (zanzu zheng) (Mallee, 1995). While some counties made national IDs available to rural residents as early as 1984, others distributed them in 1988, and still others did not issue IDs until several years later. The RCRE follow-up survey asked local officials when IDs had actually been issued to rural residents of the county. In our sample, 41 of the 88 counties issued ID cards in 1988, but cards were issued as early as 1984 in three counties and as late as 1997 in one county. It is important to note that IDs were not necessary for migration, and large numbers of migrants live in cities without legal temporary residence cards. However, migrants with temporary residence cards have a more secure position in the destination community, hold better jobs, and thus plausibly make up part of a longer-term migrant network in migrant destinations.<sup>18</sup> Thus, ID distribution had two effects after the 1988 residential registration (hukou) reform. First, the costs of migrating to a city should fall after IDs became available. Second, if the quality of the potential migrant network improves with the years since IDs are available, then the costs of finding migrant employment should continue to fall over time.<sup>19</sup>

> 18 Migrants without temporary residents permits could be subject to detention, fines and repatriation to their rural homes. While relatively rare during most of the period after 1988, this practice took place in some cities where migrants were viewed as competing with local displaced workers during the economic retrenchment that followed state sector restructuring in the late 1990s (Solinger, 1999).

> 19 Our identification strategy makes no attempt to explicitly identify the direct effect of the migrant network, as in Munshi (2003). Our purpose in using a function of years-since-IDs-issued is to identify the net effect of migration under the plausible assumption that networks of earlier migrants with legal residence may contribute to reducing the cost of migration.

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