Abstract
Promoting farmland transfer through the farmland rental market is an essential instrument to achieve the scale economy of agricultural production in China. However, past literature on the land reform in China pays more attention to the renting-in household or the renting-out household, respectively, less to both types of households together. Using a large-scale survey of farm households in China, we examine the determinants of participation in the farmland rental market and quantify the impact of the rental market on farmers' income. Findings show household off-farm income, family members' part-time employment, agricultural subsidies, and participation in agricultural cooperatives significantly affect farmers' participation in the farmland rental market. Participation in the farmland rental market significantly increases the income of renting-in households, while it decreases the income of renting-out households, which might result from the temporary lag effect of the land system reform.
Highlights
Land reforms implemented since the beginning of the 1980s have greatly stimulated China’s rural land rental market
We focus on the rental land market in the Shandong province that lies on the coast of northeast China and uses recently collected data on renting-in household and their matched renting-out household to estimate the income effect from land renting
Li and Ai are the fixed number of rural labor and land endowments, respectively, of the i household, while ai is a set of household characteristics; f(ai, labors engaged in the farming (Lia), Ai) is an agricultural production function; p stands for the price of agricultural products; w denotes the wage rate of off-farm employment for Lio; and r is a competitive rent in the rental land market
Summary
Land reforms implemented since the beginning of the 1980s have greatly stimulated China’s rural land rental market. Findings in China show that tenure-enhanced land reforms increased the land market activities by 5.5% from the renting-in households (Deininger et al, 2015) [13]. Despite the general finding of positive effects from the rural land market, questions still remain about how the rental market improve income in the smallholder farming system for both renting-in and renting-out household. We focus on the rental land market in the Shandong province that lies on the coast of northeast China and uses recently collected data on renting-in household and their matched renting-out household to estimate the income effect from land renting. Because of the above reasons, it will be interesting to estimate the income effect and the determinants of rural land rental market participation in Shandong province.
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