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Development of land rental market and its effect on household farming in rural China : an empirical study in Zhejiang Province

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  • Hoken, Hisatoshi
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    Abstract

    This paper investigates the impact of land rental market development on the efficiency of labor allocation and land utilization in rural China. To test the hypothesis that the shadow wage of a rent-in household with limited off-farm opportunities will increase with the development of a land rental market for households, a statistical comparison between the shadow wage and the estimated market wage was conducted. The results showed that the shadow wage for both rent-in households and non-rent-in households was significantly lower than the market wage, but that the wage for the rent-in households was statistically higher than that for non-rent-in households in Fenghua and Deqing, the two counties surveyed in this study. In addition, the estimated marginal product of farmland for rent-in households was statistically higher than the actual land rent that those households paid, while a null hypothesis that the actual rental fee accepted by rent-out households is equivalent to the marginal product of farmland for those households was not rejected in Fenghua county where land transactions by mutual agreement were more prevalent. These results indicate that the development of the land rental market facilitates the efficiency of labor allocation and farmland utilization in rural China.

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    File URL: http://ir.ide.go.jp/dspace/bitstream/2344/1112/1/ARRIDE_Discussion_No.323_hoken.pdf
    File Function: First version, 2012
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    Bibliographic Info

    Paper provided by Institute of Developing Economies, Japan External Trade Organization(JETRO) in its series IDE Discussion Papers with number 323.

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    Date of creation: Feb 2012
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    Publication status: Published in IDE Discussion Paper. No. 323. 2012.2
    Handle: RePEc:jet:dpaper:dpaper323

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    Related research

    Keywords: China; Land use; Farm management; Farmers; Household; Land Rental Market; Agricultural Production Function; Household Model;

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    References

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    1. 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.
    2. Shingo Kimura & Keijiro Otsuka & Tetsushi Sonobe & Scott Rozelle, 2011. "Efficiency of Land Allocation through Tenancy Markets: Evidence from China," Economic Development and Cultural Change, University of Chicago Press, vol. 59(3), pages 485 - 510.
    3. McMillan, John & Whalley, John & Zhu, Lijing, 1989. "The Impact of China's Economic Reforms on Agricultural Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 781-807, August.
    4. Dong, Xiao-Yuan, 1996. "Two-tier land tenure system and sustained economic growth in post-1978 rural China," World Development, Elsevier, vol. 24(5), pages 915-928, May.
    5. Otsuka, Keijiro, 2007. "Efficiency and Equity Effects of Land Markets," Handbook of Agricultural Economics, Elsevier.
    6. Tadashi Sonoda & Yoshihiro Maruyama, 1999. "Effects of the Internal Wage on Output Supply: A Structural Estimation for Japanese Rice Farmers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 131-143.
    7. Deininger, Klaus & Jin, Songqing & Nagarajan, Hari K., 2008. "Efficiency and equity impacts of rural land rental restrictions: Evidence from India," European Economic Review, Elsevier, vol. 52(5), pages 892-918, July.
    8. Yao, Yang, 1999. "Rural industry and labor market integration in eastern China," Journal of Development Economics, Elsevier, vol. 59(2), pages 463-496, August.
    9. 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.
    10. Yang Yao, 2000. "The Development of the Land Lease Market in Rural China," Land Economics, University of Wisconsin Press, vol. 76(2), pages 252-266.
    11. Li, Guo & Rozelle, Scott & Brandt, Loren, 1998. "Tenure, land rights, and farmer investment incentives in China," Agricultural Economics, Blackwell, vol. 19(1-2), pages 63-71, September.
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