Has the Sloping Land Conversion Program in China impacted the income and employment of rural households?

Abstract

As the largest scale payment for ecosystem services program in the developing world, one of the key objectives of the Sloping Land Conversion Program (the SLCP) is to increase rural households' income and to reallocate their employments. This paper estimates the effects of the SLCP on rural households' income and employment changes using the unique panel dataset of 1001 rural households in six provinces from 1995 to 2014. Following a strict parallel trend and other econometrics tests, the Propensity score matching-Difference-in-differences (PSM-DID) estimation technique was used. Based on the unique panel dataset, this paper expands upon existing studies by estimating the effects of mid-to-long-term and subsidy scheme adjustment of the SLCP on rural households' income and employment. Our empirical results indicate that 1) the SLCP has no significant effect on rural households’ total income, while it has a negative effect on farm income. 2) The SLCP has a positive effect on forestry labor input. 3) Half reduction subsidy of the SLCP has caused different effects on rural households’ income and employment compared with that before policy adjustment. 4) The income effects of the SLCP are indifferent by income, location, demographic or resource endowment sub groups. Policy decision-makers should pay more attention to create more off-farm opportunities for rural households enrolled in the SLCP to maintain the achievements of the SLCP.