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

Hoken Hisatoshi

No 323, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

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.

Keywords: China; Land use; Farm management; Farmers; Household; Land Rental Market; Agricultural Production Function; Household Model (search for similar items in EconPapers)
JEL-codes: J22 O13 Q12 Q15 (search for similar items in EconPapers)
Date: 2012-02-01
New Economics Papers: this item is included in nep-agr and nep-tra
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Citations: View citations in EconPapers (4)

Published in IDE Discussion Paper = IDE Discussion Paper, No. 323. 2012-02-01

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