Abstract
The rural land rental market is playing an increasingly important role in the agricultural transformation period for developing countries, including China, where rural farmland rental is highly context-specific with the implementation of the collective-owned rural land system; thus, in turn, the access to farmland rental markets for rural households has profoundly influenced their livelihood strategies and income earnings. This paper investigates the income impact differences caused by rural households’ farmland rental participation activities and explores such impact mechanisms by further evaluating the income impacts caused by rental area and household agricultural productivity. Data from the Chinese national household survey were used for estimating the empirical models. Our results show that farmland renting has positively affected households’ on-farm and total income, but there is no significant effect upon off-farm income. According to income differences across quantiles, we find households with high on-farm income are more sensitive about enlarging their farm size by renting farmland, and households with middle and upper-middle off-income may benefit more from renting out their farmland. Furthermore, the joint effects of renting area and household agricultural productivity on lessee households’ farm income is significantly positive. For lessor households, our results indicate that renting out farmland did not improve their off-farm and total income as it may have a limited effect on farm household labor distribution. Our findings suggest that engaging in farmland rental activity can enhance farming productivity efficiency and poverty alleviation among rural households. Under the collective-owned rural land system, it is urgent and necessary to initiate and design incentive policies to encourage highly efficient large farms to expand the farm size and provide smallholders with equal opportunities to engage in farmland rental activities.
Highlights
Farmland is the primary production means in agrarian economies, and a well-functioning land market is necessary for enhancing land use efficiency and contributing to agricultural development
The F-statistics of the first-stage regressions were larger than the threshold value of 10 [78], and the Cragg–Donald minimum eigenvalue statistics were larger than the critical value of each model for the nominal 5% Wald test, suggesting that the instrumental variables satisfied the strength requirement
This paper’s results showed that farmland rental participation affected household income significantly—that is, lessees’ renting of farmland positively increased their households’ on-farm and total income; this on-farm income positively depended on renting scale and household agricultural productivity, while renting out farmland fails to improve lessor households’ off-farm and total income on average
Summary
Farmland is the primary production means in agrarian economies, and a well-functioning land market is necessary for enhancing land use efficiency and contributing to agricultural development. A growing branch of literature has been addressing the significant role played by farmland rental markets in increasing income and farmland distribution equity among farm-owning households in developing countries [1,2,3,4,5,6,7], including China [8,9], where the rural farmland rental market is highly context-specific with the practice of collective ownership [10]. The most significant difference between farmland rentals in China and other countries is that only farmland management rights can be transferred to lessee units. Over the decades since the beginning of the Household Responsibility System (HRS) land reform (1978), many changes have occurred in the farmland rental system, from the prohibition of farmland rentals among farmers to the legalization of farmland rental activities. The HRS initially marked dramatic changes for land tenure institution and production relations—
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