Increasing Wages, Factor Substitution, and Cropping Pattern Changes in China

Zhoufu Yan, Shurui Zhang, Fangwei Wu and Binlei Gong

China & World Economy, 2023, vol. 31, issue 5, 190-214

Abstract: This article analyzed the influence of increasing wages on cropping patterns from theoretical and empirical perspectives. The results showed that the increasing labor cost provided a significant incentive to adjust the grain cropping pattern, which increased the production of the three major cereal grains but reduced the production of other grain crops. Increasing wages had a significant negative impact on cash crops. More labor‐intensive cash crops experienced a larger negative impact in the context of increasing wages. The increase in labor costs also had a negative impact on the proportion of vegetables produced, which was more evident in northern China. A further mechanism test indicated that factor substitution was a significant reason for cropping pattern changes; this illustrated the substitution of labor by machinery not only between grain crops and cash crops but also among different cash crops.

Date: 2023
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