Impact of land fragmentation on marginal productivity of agricultural labor and non-agricultural labor supply: A case study of Jiangsu, China

Abstract

In the context of China's rapid economic development, numerous rural laborers go out to work driven by economic interests. How to release the surplus rural labor effectively is critical for the further development of urbanization in China. Land fragmentation is a basic characteristic of agricultural production in China. Land fragmentation also affects labor use. In the current process of China's rural reform and urbanization, large amounts of surplus rural labor will continue to transfer to urban and non-agricultural sectors in the near future, and the transfer mode will turn from individual migration to family migration. Marginal productivity of agricultural labor has an important influence on farmers' labor decisions. Using household survey data collected from Jiangsu province in China, this study analyzes the theoretical mechanism, and empirically tests the direction and degree of the impact of land fragmentation on marginal productivity of agricultural labor and non-agricultural labor supply. The results reveal that land fragmentation decreases marginal productivity of agricultural labor and increases non-agricultural labor supply. This effect is especially obvious for young agricultural workers. Supplementing relevant policies and preferential measures, the government should guide farmers to realize joint land operation and transfer of farmland management rights on a voluntary basis. Further, it is necessary to increase the supply of mechanized services and facilitate the development of small-sized agricultural machine that can be used on smaller landholdings.