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Pushed out or pulled in? Participation in non-farm activities in rural China

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  • Yuanxiang Liu

Abstract

Purpose - The purpose of this paper is to identify the determinants of China’s rural households’ non-farm participation. The authors pay special attention to the effect of potential income differential on this participation. Design/methodology/approach - The data used in this study come from a household survey conducted in Hubei Province. The authors estimate participation equation and income equation, respectively, then introduce potential income differential simulated in participation equation to examine its effect on non-farm participation. Findings - Potential income differential serves as the major pull factor that favors non-farm participation. Education, proximity to a city and specialized commercial farming are crucial in helping rural households to participate in non-farm production; while the land shortage or the labor surplus act as the push factor in non-farm participation. Better quality of land reduces the household’s propensity to participate in non-farm activities. Moreover, the income gap between households that participate in non-farm activities and pure farmers is mainly determined by the differences in household characteristics. Originality/value - The authors use the method of “switching regression and structural probit” to examine the impact of potential income differential on non-farm participation, and simulate the response of the participation probability to the change of potential income differential. The authors also analyze the sources of income gap between non-farm and farm households using Oaxaca decomposition.

Suggested Citation

  • Yuanxiang Liu, 2017. "Pushed out or pulled in? Participation in non-farm activities in rural China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 9(1), pages 111-129, February.
    • Handle: RePEc:eme:caerpp:caer-11-2015-0166
    DOI: 10.1108/CAER-11-2015-0166
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    Citations

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    Cited by:

    1. Hua, Xiaobo & Kono, Yasuyuki & Zhang, Le & Xu, Erqi & Luo, Renshan, 2019. "How transnational labor migration affects upland land use practices in the receiving country: Findings from the China-Myanmar borderland," Land Use Policy, Elsevier, vol. 84(C), pages 163-176.
    2. Senadza Bernardin & Nketiah-Amponsah Edward & Ampaw Samuel, 2018. "Nonfarm diversification and the well-being of rural farm households in developing countries: Evidence from Ghana using new dataset," Review of Economics, De Gruyter, vol. 69(3), pages 207-229, December.
    3. Jin, Shaoze & Min, Shi & Huang, Jikun & Waibel, Hermann, 2021. "Falling price induced diversification strategies and rural inequality: Evidence of smallholder rubber farmers," World Development, Elsevier, vol. 146(C).
    4. Orlando Cimino & Marco Vassallo & Roberto Henke & Francesco Vanni, 2021. "Income Diversification Strategies of Italian Peri-Urban Farms: A Structural Equation Modeling Approach," Land, MDPI, vol. 10(8), pages 1-23, July.

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