The impact of positive agricultural income shocks on rural Chinese households

Jessica Leight

No 8434, Policy Research Working Paper Series from The World Bank

Abstract: In the post-collectivization period, rural Chinese households were required to sell part of their grain output to the state at a below-market price; however, increases in this quota price beginning in 1993 generated substantial positive income shocks. These income shocks also varied cross-sectionally in accordance with crop composition given that quotas were systematically larger for rice-producing households, generating a quasi-random source of variation in the size of the shock driven by climatic variation in suitability for rice cultivation. Households induced to experience relatively larger income shocks show evidence of decreased agricultural investment, increased investment in non-agricultural businesses, and increased migration as households gain increased income, consistent with the hypothesis that credit constraints may have constrained some households from entering non-agricultural production ex ante. In addition, there is evidence that these households were concentrated among households who had not previously diversified out of agriculture.

Keywords: Agricultural Economics; Food Security; Crops and Crop Management Systems; Climate Change and Agriculture; Inequality; Public Sector Administrative&Civil Service Reform; Democratic Government; De Facto Governments; Public Sector Administrative and Civil Service Reform (search for similar items in EconPapers)
Date: 2018-05-09
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The Impact of Positive Agricultural Income Shocks on Rural Chinese Households (2020)
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