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Farmland Leasing, misallocation Reduction, and agricultural total factor Productivity: Insights from rice production in China

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  • Zhang, Xiaoheng
  • Hu, Lingxiao
  • Yu, Xiaohua

Abstract

Reducing factor misallocation is crucial for enhancing agricultural aggregate total factor productivity (TFP) and narrowing the income gap between urban and rural areas in China. This paper presents a theoretical framework illustrating how farmland leasing affects aggregated TFP via the reduction of misallocation. Utilizing a comprehensive dataset of cost and benefit survey for Jiangsu rice farmers, monthly surface climatological data, and soil characteristic information from FAO, this study finds that efficient factor reallocation could theoretically result in a 23.6% increase in aggregate TFP. In practice, a 1% increase in farmland leasing leads to a 1.087% gain in aggregate TFP and a 0.267% reduction in misallocation using IV regression. These effects become larger after the Three Rights Separation (TRS) reform compared to prior conditions. The mediation effects of farmland leasing on TFP through misallocation reduction are only observed in Southern Jiangsu, possibly due to farmland concentration.

Suggested Citation

  • Zhang, Xiaoheng & Hu, Lingxiao & Yu, Xiaohua, 2023. "Farmland Leasing, misallocation Reduction, and agricultural total factor Productivity: Insights from rice production in China," Food Policy, Elsevier, vol. 119(C).
    • Handle: RePEc:eee:jfpoli:v:119:y:2023:i:c:s0306919223001161
    DOI: 10.1016/j.foodpol.2023.102518
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    23. Deininger, Klaus & Ali, Daniel A., 2025. "Land Price Effects of Informality, Farm Size, and Land Reform: Evidence from More Than One Million Transactions in Ukraine," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 361025, Agricultural and Applied Economics Association.

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