Land and labour market participation decisions under imperfect markets: a case study in North-east Jiangxi Province, China.

Abstract

AbstractThis chapter analyses the factors influencing household land and labour market decisions in rural China. It shows that, when land and labour market imperfections exist, decisions on land and labour use are made jointly and therefore need to be analysed as such. The insights gained from jointly analysing land and labour market decisions are significantly different from those obtained from studies focusing on each market separately. The estimation results for 329 farm households collected in three villages in Jiangxi province show that households with both low and high land availability are less likely to participate in off-farm employment. A possible explanation could be that households with small land endowments are not wealthy enough to work off-farm, while households with, relatively large land endowments have difficulties in renting out their land and hence prefer to work on-farm. The average adult age shows an inverted U-shaped relationship with the likelihood of being involved in migration. Differences in estimated turning points suggest that households involved in migration and renting-in of land comprise mainly migrants who return home after a few years of working elsewhere and reinvest in agriculture. The number of durable assets has a significant positive effect on the probability that households are involved in local off-farm employment. This result suggests that richer households may have better access to local off-farm jobs than poorer households. Possession of a land contract and having a migration network has a positive effect on migration. Enjoying more land transfer rights has a significant positive effect on land renting-in. These results confirm that households facing low transaction costs in labour and land market are more likely to participate in these markets.