Nonfarm employment and consumption diversification in rural China

Wanglin Ma, Puneet Vatsa, Hongyun Zheng and Dil Rahut

Economic Analysis and Policy, 2022, vol. 76, issue C, 582-598

Abstract: With rapid growth and development, nonfarm employment has become an important source of livelihood for millions of rural households in China. Rural nonfarm employment is leading to an increase in income and consumption diversification, which has a direct implication on household well-being. Using Chinese General Social Survey 2017 data, this study explores the effects of nonfarm employment on Chinese rural households’ consumption diversification, measured by the Simpson index. We employ the endogenous treatment regression model and a synthesized instrumental variable to address the endogeneity of the nonfarm employment variable. Findings show that nonfarm employment increases consumption diversification significantly. We find heterogeneous effects of nonfarm employment between males and females and across geographical locations. In particular, our estimates show a higher level of consumption diversification is associated with nonfarm employment of female (relative to male) respondents and those residing in China’s eastern and western (relative to central) regions. Consumption diversification seems to monotonically increase with the increase in the household size and consumption expenditure quintiles. Further analysis reveals that nonfarm employment significantly increases household expenditures on food, culture and leisure activities, and online shopping.

Keywords: Nonfarm employment; Consumption diversification; Simpson index; China (search for similar items in EconPapers)
JEL-codes: E21 L25 R23 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0313592622001527
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:76:y:2022:i:c:p:582-598

DOI: 10.1016/j.eap.2022.09.010

Access Statistics for this article

Economic Analysis and Policy is currently edited by Clevo Wilson

More articles in Economic Analysis and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().