Conservation Payments, Liquidity Constraints and Off-Farm Labor: Impact of the Grain for Green Program on Rural Households in China
AbstractThis study evaluates the off-farm labor response of rural households participating in the Grain for Green program in China, the largest conservation set-aside program in the developing world. Using a panel data set that we designed and implemented, we examine the impact of the program on changes in off-farm labor participation between 1999 (pre-program) and 2004 (post-program) using a difference-in-differences approach and several extensions that account for program intensity. We also test whether the program impact is diverse depending on level of physical and human capital of participants. We find that on average the Grain for Green program has a positive effect on off-farm labor participation. Importantly, however, we find that program effects vary across groups of individuals in the sample. For example, we find that lower initial levels of wealth enhance the impact of the program on the off-farm employment activity. This result supports our view that the Grain for Green program may be relaxing liquidity constraints for the participating households and that is one reason why participants are more likely to find off-farm employment compared to non-participants. The positive impact of the conservation payments on off-farm labor is in stark contrast with the findings in the US where most studies have found that government payments to farmers decrease off-farm labor participation. One reason for the difference in findings between China and US may be because there are more impediments to participating in off-farm labor market in the poor areas of rural China (the areas in which the programs are being implemented) compared to the US and Grain for Green helps overcome these constraints. It could also be that there are differences in the age structure of the farming population between China (which is generally younger) and the US (which is generally older). This interpretation is reinforced by the finding that, while the average impact is positive, there is an even larger measured positive effect for the younger cohort. The measured effect of Grain for Green is negative for the older cohorts. We also find no impact on off-farm labor participation for individuals with low educational attainment (and positive for those with higher levels of education), suggesting that human capital is necessary when trying to achieve a structural change to earning activities. If policymakers want to achieve a win-win outcome through Grain for Green by meeting both the program's environmental and development goals, they may need to provide extra support (for example, through greater assistance to education) to the vulnerable sub-populations in the program areas.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN with number 9698.
Date of creation: 2007
Date of revision:
Contact details of provider:
Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org
More information through EDIRC
Payments for environmental services; off-farm labor supply; Grain for Green program; China; program evaluation; Environmental Economics and Policy; Farm Management; J22; O13; Q23;
Other versions of this item:
- Emi Uchida & Scott Rozelle & Jintao Xu, 2009. "Conservation Payments, Liquidity Constraints, and Off-Farm Labor: Impact of the Grain-for-Green Program on Rural Households in China," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 70-86.
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Jia, Lili & Petrick, Martin, 2012.
"How land fragmentation affects off-farm labor supply in China: Evidence from household panel data,"
2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil
126263, International Association of Agricultural Economists.
- Jia, Lili & Petrick, Martin, 2011. "How land fragmentation affects off-farm labor supply in China: Evidence from household panel data," 51st Annual Conference, Halle, Germany, September 28-30, 2011 114522, German Association of Agricultural Economists (GEWISOLA).
- Sylvie Démurger & Haiyuan Wan, 2012.
"Payments for ecological restoration and internal migration in China: the sloping land conversion program in Ningxia,"
IZA Journal of Migration,
Springer, vol. 1(1), pages 1-22, December.
- Sylvie Démurger & Haiyuan Wan, 2012. "Payments for Ecological Restoration and Internal Migration in China: The Sloping Land Conversion Program in Ningxia," Working Papers 1233, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
- Sylvie Démurger & Haiyuan Wan, 2012. "Payments for Ecological Restoration and Internal Migration in China : The Sloping Land Conversion Program in Ningxia," Working Papers halshs-00761163, HAL.
- Sylvie Démurger & Haiyuan Wan, 2012. "Payments for ecological restoration and rural labor migration in China: The Sloping Land Conversion Program in Ningxia," Post-Print halshs-00763147, HAL.
- Katrina Mullan & Pauline Grosjean & Andreas Kontoleon, 2008.
"Land Tenure Arrangements and Rural-Urban Migration in China,"
Environmental Economy and Policy Research Working Papers
37.2008, University of Cambridge, Department of Land Economics, revised 2008.
- Mullan, Katrina & Grosjean, Pauline & Kontoleon, Andreas, 2011. "Land Tenure Arrangements and Rural-Urban Migration in China," World Development, Elsevier, vol. 39(1), pages 123-133, January.
- Ben Groom & Charles Palmer, 2012. "Relaxing Constraints as a Conservation Policy," Working Papers 2012.63, Fondazione Eni Enrico Mattei.
- Kelly, Peter & Huo, Xuexi, 2013. "Land Retirement and Nonfarm Labor Market Participation: An Analysis of China’s Sloping Land Conversion Program," World Development, Elsevier, vol. 48(C), pages 156-169.
- Yanez-Pagans, Patricia, 2013. "Cash for Cooperation? Payments for Ecosystem Services and Common Property Management in Mexico," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151295, Agricultural and Applied Economics Association.
- Jia, Lili, 2012. "Land fragmentation and off-farm labor supply in China," Studies on the Agricultural and Food Sector in Central and Eastern Europe, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO), volume 66, number 66.
- Liu, Hongmei & Huang, Qiuqiong, 2013. "Adoption and continued use of contour cultivation in the highlands of southwest China," Ecological Economics, Elsevier, vol. 91(C), pages 28-37.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.