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The Effect of Off-Farm Employment on Forestland Transfers in China: A Simultaneous-Equation Tobit Model Estimation

Han Zhang (), Jari Kuuluvainen (), Hongqiang Yang (), Yi Xie () and Can Liu ()
Additional contact information
Han Zhang: College of Economics and Management, Northwest A&F University, No. 3 Taicheng Road, Yangling 712100, China
Jari Kuuluvainen: Department of Forest Sciences, University of Helsinki, P.O. Box 27, 00014 Helsinki, Finland
Yi Xie: College of Economics and Management, Beijing Forestry University, 35 Qinghua E Rd., WuDaoKou, Haidian Qu, Beijing 100085, China
Can Liu: College of Economics and Management, Northwest A&F University, No. 3 Taicheng Road, Yangling 712100, China

Sustainability, 2017, vol. 9, issue 9, 1-14

Abstract: China’s new round tenure reform has devolved collective forests to individuals on an egalitarian basis. To balance the equity–efficiency dilemma, forestland transfers are highly advocated by policymakers. However, the forestland rental market is still inactive after the reform. To examine the role of off-farm employment in forestland transfers, a simultaneous Tobit system of equations was employed to account for the endogeneity, interdependency, and censoring issues. Accordingly, the Nelson–Olson two-stage procedure, embedded with a multivariate Tobit estimator, was applied to a nationally representative dataset. The estimation results showed that off-farm employment plays a significantly negative role in forestland rent-in, at the 5% risk level. However, off-farm activities had no significant effect on forestland rent-out. Considering China’s specific situation, a reasonable explanation is that households hold forestland as a crucial means of social security against the risk of unemployment. In both rent-in and rent-out equations, high transaction costs are one of the main obstacles impeding forestland transfer. A remarkable finding was that forestland transactions occurred with a statistically significant factor equalization effect, which would be helpful to adjust the mismatched labor–land ratio and improve the land-use efficiency.

Keywords: collective forest tenure reform; forestland transfer; off-farm employment; simultaneous-equation Tobit model; efficiency (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2017
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