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

Tianyu Gu, Xinyi Liu, Ziqi Cao and Wencong Lu ()
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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

Land, 2025, vol. 14, issue 1, 1-19

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.

Keywords: rural labor prices; land use patterns; factor substitution; translog profit function model (search for similar items in EconPapers)
JEL-codes: Q15 Q2 Q24 Q28 Q5 R14 R52 (search for similar items in EconPapers)
Date: 2025
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