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Earthbound Labor and Transitory Exit from Farming in China

Meilin Ma ()

No 277433, 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia from International Association of Agricultural Economists

Abstract: Smallholder farming remains predominant in Chinese agricultural production, despite massive outflows of rural labor to nonfarm sectors. Although a large number of agricultural households in China rent out the farmland for which they hold contract use rights, most of them still partially or seasonally cultivate the contract land. I collected survey data from 512 households in Southwest China to examine the arrangements of farmland, including abandonment, as households make transitory reductions in cultivation sizes. I develop a theory to explain why households tend to maximize the expected income by reducing cultivation sizes partially and seasonally. The theory centers upon the value of farmland as a safety net and an appreciable asset for agricultural households under imperfect land tenure and limited access to social benefit programs. The non-productive, use-based value of contract land is characterized by a function of simultaneous choices of the cultivation size and farm labor. Flexible reallocation of land use rights helps maximize the expected income, but the inefficiency in labor allocation remains considerable. Using the survey data, I find on-farm productivity of part-time farmers to be significantly lower than the opportunity nonfarm wage rate, implying $45 billion nonfarm earnings to be forgone by agricultural households per year. Acknowledgement : I am extremely grateful to Lovell Jarvis, Kevin Novan, Richard Sexton, and Jeffrey Williams for critical and insightful comments on earlier drafts. For helpful discussion and feedback, I thank Timothy Beatty, Steve Boucher, Colin Carter, Michael Carter, Xiaomeng Cui, Travis Lybbert, Xinshen Diao, Xiaopeng Luo, Alex McCalla, Heidi Schweizer, Daniel Sumner, Daniel Tregeagle, Yan Xu, and Xiaobo Zhang. I also thank Jianwei Zhao and Xiaomei Shen among other colleagues and government officials in China for their generous support to my field surveys in Sichuan Province. Funding for this research was provided by Henry Jastro Graduate Research Award and Banner Fellowship.

Keywords: Labor; and; Human; Capital (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-cna and nep-tra
Date: 2018-07
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