Hired‐labor demand on Chinese household farms

Abstract

PurposeThe present article presents a first‐look into the hired‐labor market in Chinese household farms using data from a national household survey conducted by the Research Center for the Rural Economy (RCRE) at China's Ministry of Agriculture. More specifically, the purpose of this paper is to evaluate the scale and dispersion of China's farm‐household hired laborers among 15 commodities, and test whether market factors influence labor‐hiring decisions – an expectation of a well‐functioning labor market. This research contributes to the literature concerned with the labor constraints facing Chinese household farms, especially those producing seasonal commodities.Design/methodology/approachAn econometric approach is employed to assess whether Chinese farms that hire labor are responding to market factors using two repeated cross‐sections (2006, 2007) of household survey data collected by the Research Center for Rural Economy at China's Ministry of Agriculture.FindingsThe paper finds hired labor use on very small‐scale farms is surprisingly prevalent, in contrast to previously published data. The regression results suggest that labor hiring by Chinese farm households, irrespective of farm size, responds strongly to market signals and resource constraints – more labor will be hired when the wage is lower, when output is higher, and among families with fewer family members available to farm work. And the response is particularly robust for wheat, rice, and maize, whose prices are predominant determinants of the food price index.Research limitations/implicationsThis paper is limited in its time‐series dimension and data availability. Despite those limitations, the results hold implications for further understanding China's nascent labor market and the level to which market factors have impacted rural farm households.Originality/valueFocusing on the as‐of‐yet unstudied market for hired labor on Chinese household farms, the present article makes a contribution by showing that hiring of labor in Chinese agriculture is much more prevalent than previously thought. It suggests that Chinese farm‐households are responding to certain labor‐market factors and that the household response does not weaken as the largest farms are omitted from the model, suggesting that even small farms are heeding market signals.