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Why Is the Income Effect of Farmland Transfer Inconsistent between Transferred-Out and Transferred-In Households?

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  • Lian Ke

    (School of Economics, Huazhong University of Science and Technology, Wuhan 430074, China)

  • Shan Cheng

    (School of Business, Central South University, Changsha 410083, China)

  • Diqiang Chen

    (School of Business, Central South University, Changsha 410083, China)

  • Ying Li

    (Center for Economics, Finance and Management Studies, Hunan University, Changsha 410082, China)

Abstract

Based on the 2013–2017 Chinese Family Database and China Household Finance Survey, this study examines the effect of farmland transfer on the income structure of agricultural households. We observe a significant rise in the income of transferred-out households, while that of transferred-in households is unchanged. A further empirical decomposition of income shows a significant increase in both the wage- and asset-generated incomes of transferred-out households. Although the income generated by transferred-in households through agricultural production and management increases significantly, the decrease in wage income is larger. The study’s empirical designs are robustly tested with propensity score matching and instrumental variables. Moreover, we conduct a comparative analysis of the external constraints faced by the two groups to explore the reasons for the divergence of the income effect. The results show that transferred-in households face highly pronounced external constraints in terms of capital, technology, and farmland size, while transferred-out households face relatively fewer impediments to non-agricultural employment. Our empirical results imply that external constraints can limit the social welfare improvements of agricultural land reform, suggesting that other complementary measures would be required for future policy improvements to function better.

Suggested Citation

  • Lian Ke & Shan Cheng & Diqiang Chen & Ying Li, 2023. "Why Is the Income Effect of Farmland Transfer Inconsistent between Transferred-Out and Transferred-In Households?," Sustainability, MDPI, vol. 15(9), pages 1-19, April.
  • Handle: RePEc:gam:jsusta:v:15:y:2023:i:9:p:7379-:d:1135953
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