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Effects of Rising Rural Labor Prices on Land Use Pattern: Evidence from Grain Production in China

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Listed:
  • Tianyu Gu

    (China Academy for Rural Development, School of Public Affairs, Zhejiang University, Hangzhou 310058, China)

  • Xinyi Liu

    (Department of Economic and Trade, Hebei University of Water Resources and Electric Engineering, Cangzhou 061000, China)

  • Ziqi Cao

    (China Academy for Rural Development, School of Public Affairs, Zhejiang University, Hangzhou 310058, China)

  • Wencong Lu

    (China Academy for Rural Development, School of Public Affairs, Zhejiang University, Hangzhou 310058, China)

Abstract

As rural labor prices have risen constantly over the last two decades, Chinese grain production that relies heavily on manual labor has been subjected to considerable challenges and has experienced profound changes in land use patterns. Using a fixed effect model and translog profit function model, this paper investigates the effects of rising rural labor prices on land use patterns in Chinese grain production. The empirical results from 2004–2022 province-level panel data showed that the rising rural labor prices provided significant incentives to adjust the land use patterns of three staple grain crops. The increase in labor prices had a negative effect on the share of the planting area of rice and maize, while wheat experienced a substantial increase in its proportion of planting area in the context of rising labor prices. A further mechanism test based on 2004–2012 farm-level panel data revealed that the factor substitutions, especially labor substitution with fertilizer and machinery, were a significant contributor to the changes in land use patterns. In the spatial–temporal analysis, changes in land use patterns were found to be more pronounced in regions with more rolling terrain conditions but remained relatively stable across years. These findings highlight the importance of the development and promotion of labor-saving technologies in grain production, especially enhanced-efficiency fertilizer and small-sized agricultural machinery. In addition, agricultural subsidies targeted at farmers in hilly and mountainous regions might be a good way to mitigate potential land abandonment in the context of rising labor prices.

Suggested Citation

  • Tianyu Gu & Xinyi Liu & Ziqi Cao & Wencong Lu, 2025. "Effects of Rising Rural Labor Prices on Land Use Pattern: Evidence from Grain Production in China," Land, MDPI, vol. 14(1), pages 1-19, January.
    • Handle: RePEc:gam:jlands:v:14:y:2025:i:1:p:112-:d:1562638
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    References listed on IDEAS

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    1. Surjit S. Sidhu & Carlos A. Baanante, 1981. "Estimating Farm-Level Input Demand and Wheat Supply in the Indian Punjab Using a Translog Profit Function," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(2), pages 237-246.
    2. Zhoufu Yan & Shurui Zhang & Fangwei Wu & Binlei Gong, 2023. "Increasing Wages, Factor Substitution, and Cropping Pattern Changes in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 31(5), pages 190-214, September.
    3. Colin G. Thirtle & David E. Schimmelpfennig & Robert E Townsend, 2002. "Induced Innovation in United States Agriculture, 1880–1990: Time Series Tests and an Error Correction Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 598-614.
    4. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1975. "Transcendental Logarithmic Utility Functions," American Economic Review, American Economic Association, vol. 65(3), pages 367-383, June.
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