IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp16575.html
   My bibliography  Save this paper

Land Markets and Labor Productivity: Empirical Evidence from China

Author

Listed:
  • Zhang, Jian

    (China University of Mining and Technology)

  • Mishra, Ashok K.

    (Arizona State University)

  • Zhu, Peixin

    (Nanjing Agricultural University)

Abstract

This study investigates the impact of the land rental market (LRM) on labor productivity in rural China. Particular attention is given to farm and non-farm labor productivity. Using 2012 household-level data and a multinomial endogenous switching treatment regression (MESTR) technique, we find that rural households renting-in farmland increased labor productivity in the farm sector by about 55%, while labor productivity in the non-farm sector decreased by about 6%. We also find that rural households renting-out farmland had lower labor productivity in both the farm and non-farm sectors by 13% and 9%, respectively. More family labor transferred from the farm to the non-farm sector after renting-out land.

Suggested Citation

  • Zhang, Jian & Mishra, Ashok K. & Zhu, Peixin, 2023. "Land Markets and Labor Productivity: Empirical Evidence from China," IZA Discussion Papers 16575, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16575
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp16575.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jikun Huang & Jiping Ding, 2016. "Institutional innovation and policy support to facilitate small-scale farming transformation in China," Agricultural Economics, International Association of Agricultural Economists, vol. 47(S1), pages 227-237, November.
    2. Liu, Ziming & Rommel, Jens & Feng, Shuyi & Hanisch, Markus, 2017. "Can land transfer through land cooperatives foster off-farm employment in China?," China Economic Review, Elsevier, vol. 45(C), pages 35-44.
    3. Zhao, Yaohui, 1999. "Labor Migration and Earnings Differences: The Case of Rural China," Economic Development and Cultural Change, University of Chicago Press, vol. 47(4), pages 767-782, July.
    4. Luigi Minale, 2018. "Agricultural productivity shocks, labour reallocation and rural–urban migration in China," Journal of Economic Geography, Oxford University Press, vol. 18(4), pages 795-821.
    5. Zhang, Linxiu & Huang, Jikun & Rozelle, Scott, 2002. "Employment, emerging labor markets, and the role of education in rural China," China Economic Review, Elsevier, vol. 13(2-3), pages 313-328.
    6. François Bourguignon & Martin Fournier & Marc Gurgand, 2007. "Selection Bias Corrections Based On The Multinomial Logit Model: Monte Carlo Comparisons," Journal of Economic Surveys, Wiley Blackwell, vol. 21(1), pages 174-205, February.
    7. Lihua Li & Chenggang Wang & Eduardo Segarra & Zhibiao Nan, 2013. "Migration, remittances, and agricultural productivity in small farming systems in Northwest China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 5(1), pages 5-23, January.
    8. Deininger, Klaus & Jin, Songqing, 2005. "The potential of land rental markets in the process of economic development: Evidence from China," Journal of Development Economics, Elsevier, vol. 78(1), pages 241-270, October.
    9. Michael R. Carter & Yang Yao, 2002. "Local versus Global Separability in Agricultural Household Models: The Factor Price Equalization Effect of Land Transfer Rights," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 702-715.
    10. Zhang, Xiaobo & Yang, Jin & Reardon, Thomas, 2020. "Mechanization outsourcing clusters and division of labor in Chinese agriculture," IFPRI book chapters, in: An evolving paradigm of agricultural mechanization development: How much can Africa learn from Asia?, chapter 2, pages 71-96, International Food Policy Research Institute (IFPRI).
    11. Cai, Fang & Wang, Dewen & Du, Yang, 2002. "Regional disparity and economic growth in China: The impact of labor market distortions," China Economic Review, Elsevier, vol. 13(2-3), pages 197-212.
    12. Menale Kassie & Hailemariam Teklewold & Paswel Marenya & Moti Jaleta & Olaf Erenstein, 2015. "Production Risks and Food Security under Alternative Technology Choices in Malawi: Application of a Multinomial Endogenous Switching Regression," Journal of Agricultural Economics, Wiley Blackwell, vol. 66(3), pages 640-659, September.
    13. Shenggen Fan & Connie Chan‐Kang, 2005. "Is small beautiful? Farm size, productivity, and poverty in Asian agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 32(s1), pages 135-146, January.
    14. Zou, Baoling & Mishra, Ashok K. & Luo, Biliang, 2018. "Aging population, farm succession, and farmland usage: Evidence from rural China," Land Use Policy, Elsevier, vol. 77(C), pages 437-445.
    15. Lihua Li & Chenggang Wang & Eduardo Segarra & Zhibiao Nan, 2013. "Migration, remittances, and agricultural productivity in small farming systems in Northwest China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 5(1), pages 5-23, January.
    16. Fang Cai & Meiyan Wang, 2008. "A Counterfactual Analysis on Unlimited Surplus Labor in Rural China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 16(1), pages 51-65, January.
    17. Jordan Chamberlin & Jacob Ricker-Gilbert, 2016. "Participation in Rural Land Rental Markets in Sub-Saharan Africa: Who Benefits and by How Much? Evidence from Malawi and Zambia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(5), pages 1507-1528.
    18. Salvatore Di Falco & Marcella Veronesi, 2013. "How Can African Agriculture Adapt to Climate Change? A Counterfactual Analysis from Ethiopia," Land Economics, University of Wisconsin Press, vol. 89(4), pages 743-766.
    19. Xiaohua Yu & Guoqing Zhao, 2009. "Chinese agricultural development in 30 years: A literature review," Frontiers of Economics in China, Springer;Higher Education Press, vol. 4(4), pages 633-648, December.
    20. Jin, Songqing & Deininger, Klaus, 2009. "Land rental markets in the process of rural structural transformation: Productivity and equity impacts from China," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 629-646, December.
    21. Ito, Junichi, 2010. "Inter-regional difference of agricultural productivity in China: Distinction between biochemical and machinery technology," China Economic Review, Elsevier, vol. 21(3), pages 394-410, September.
    22. Songqing Jin & T. S. Jayne, 2013. "Land Rental Markets in Kenya: Implications for Efficiency, Equity, Household Income, and Poverty," Land Economics, University of Wisconsin Press, vol. 89(2), pages 246-271.
    23. Linxiu Zhang & Yongqing Dong & Chengfang Liu & Yunli Bai, 2018. "Off-farm employment over the past four decades in rural China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 10(2), pages 190-214, May.
    24. Feng, Shuyi & Heerink, Nico & Ruben, Ruerd & Qu, Futian, 2010. "Land rental market, off-farm employment and agricultural production in Southeast China: A plot-level case study," China Economic Review, Elsevier, vol. 21(4), pages 598-606, December.
    25. Djido, Abdoulaye I. & Shiferaw, Bekele A., 2018. "Patterns of labor productivity and income diversification – Empirical evidence from Uganda and Nigeria," World Development, Elsevier, vol. 105(C), pages 416-427.
    26. Douglas Gollin & David Lagakos & Michael E. Waugh, 2014. "The Agricultural Productivity Gap," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(2), pages 939-993.
    27. Carter, Colin A. & Chen, Jing & Chu, Baojin, 2003. "Agricultural productivity growth in China: farm level versus aggregate measurement," China Economic Review, Elsevier, vol. 14(1), pages 53-71.
    28. Xiangping Liu & Lori Lynch, 2011. "Do Agricultural Land Preservation Programs Reduce Farmland Loss? Evidence from a Propensity Score Matching Estimator," Land Economics, University of Wisconsin Press, vol. 87(2), pages 183-201.
    29. Kung, James Kai-sing, 2002. "Off-Farm Labor Markets and the Emergence of Land Rental Markets in Rural China," Journal of Comparative Economics, Elsevier, vol. 30(2), pages 395-414, June.
    30. Su, Weiliang & Eriksson, Tor & Zhang, Linxiu & Bai, Yunli, 2016. "Off-farm employment and time allocation in on-farm work in rural China from gender perspective," China Economic Review, Elsevier, vol. 41(C), pages 34-45.
    31. Linxiu Zhang & Yongqing Dong & Chengfang Liu & Yunli Bai, 2018. "Off-farm employment over the past four decades in rural China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 10(2), pages 190-214, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jian Zhang & Ashok K. Mishra & Peixin Zhu, 2021. "Land rental markets and labor productivity: Evidence from rural China," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(1), pages 93-115, March.
    2. Zhang, Jian & Mishra, Ashok K. & Zhu, Peixin & Li, Xiaoshun, 2020. "Land rental market and agricultural labor productivity in rural China: A mediation analysis," World Development, Elsevier, vol. 135(C).
    3. Zhang, Jian & Mishra, Ashok K. & Hirsch, Stefan, 2021. "Market-oriented agriculture and farm performance: Evidence from rural China," Food Policy, Elsevier, vol. 100(C).
    4. Zhang, Jian & Mishra, Ashok K. & Ma, Xianlei, 2023. "Mechanism of Chinese farmers’ land rental participation: The role of invisible markets and public intervention," Food Policy, Elsevier, vol. 117(C).
    5. Wenjing Han & Zhengfeng Zhang & Xiaoling Zhang & Li He, 2021. "Farmland Rental Participation, Agricultural Productivity, and Household Income: Evidence from Rural China," Land, MDPI, vol. 10(9), pages 1-22, August.
    6. Tongwei, Qiu & Luo, Biliang & Boris Choy, S.T. & Li, Yifei & He, Qinying, 2020. "Do land renting-in and its marketization increase labor input in agriculture? Evidence from rural China," Land Use Policy, Elsevier, vol. 99(C).
    7. Lijing Zhang & Mingyong Hong & Xiaolin Guo & Wenrong Qian, 2022. "How Does Land Rental Affect Agricultural Labor Productivity? An Empirical Study in Rural China," Land, MDPI, vol. 11(5), pages 1-19, April.
    8. Baomin Cui & Lingling Tang & Jianxu Liu & Songsak Sriboonchitta, 2023. "How Does Land Transfer Impact the Household Labor Productivity in China? Empirical Evidence from Survey Data in Shandong," Land, MDPI, vol. 12(4), pages 1-24, April.
    9. Jia, Lili, 2012. "Land fragmentation and off-farm labor supply in China," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 66, number 66.
    10. Jinning Li & Shunfeng Song & Guanglin Sun, 2022. "Non-Farm Employment, Farmland Renting and Farming Ability: Evidence from China," IJERPH, MDPI, vol. 19(9), pages 1-16, April.
    11. Zhang, Jian & Mishra, Ashok K. & Zhu, Peixin, 2019. "Identifying livelihood strategies and transitions in rural China: Is land holding an obstacle?," Land Use Policy, Elsevier, vol. 80(C), pages 107-117.
    12. Deng, Xin & Xu, Dingde & Zeng, Miao & Qi, Yanbin, 2019. "Does early-life famine experience impact rural land transfer? Evidence from China," Land Use Policy, Elsevier, vol. 81(C), pages 58-67.
    13. Zhihua Leng & Yana Wang & Xinshuo Hou, 2021. "Structural and Efficiency Effects of Land Transfers on Food Planting: A Comparative Perspective on North and South of China," Sustainability, MDPI, vol. 13(6), pages 1-18, March.
    14. Li, Xinyi & Ito, Junichi, 2021. "An empirical study of land rental development in rural Gansu, China: The role of agricultural cooperatives and transaction costs," Land Use Policy, Elsevier, vol. 109(C).
    15. Jianyun Hou & Xuexi Huo & Runsheng Yin, 2017. "Land Rental Market Participation and Its Impact on Fixed Investment and Household Welfare: Evidence from Chinese Apple Production Sites," Sustainability, MDPI, vol. 9(11), pages 1-15, October.
    16. Daymard, Arnaud, 2022. "Land rental market reforms: Can they increase outmigration from agriculture? Evidence from a quantitative model," World Development, Elsevier, vol. 154(C).
    17. Yijie Wang & Guoyong Liu & Bangbang Zhang & Zhiyou Liu & Xiaohu Liu, 2022. "Coordinated Development of Farmland Transfer and Labor Migration in China: Spatio-Temporal Evolution and Driving Factors," Land, MDPI, vol. 11(12), pages 1-19, December.
    18. Feng, Shuyi & Heerink, Nico & Ruben, Ruerd & Qu, Futian, 2010. "Land rental market, off-farm employment and agricultural production in Southeast China: A plot-level case study," China Economic Review, Elsevier, vol. 21(4), pages 598-606, December.
    19. Qian, Long & Lu, Hua & Gao, Qiang & Lu, Hualiang, 2022. "Household-owned farm machinery vs. outsourced machinery services: The impact of agricultural mechanization on the land leasing behavior of relatively large-scale farmers in China," Land Use Policy, Elsevier, vol. 115(C).
    20. Ren, Guangcheng & Zhu, Xueqin & Heerink, Nico & Feng, Shuyi, 2020. "Rural household migration in China – the roles of actual and perceived tenure security," China Economic Review, Elsevier, vol. 63(C).

    More about this item

    Keywords

    land rental market; labor productivity; farm sector; non-farm sector;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp16575. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.