Off-farm employment, farmland transfer and agricultural investment behavior: A study of joint decision-making among North China Plain farmers

Abstract

Improving farmers’ ability to make joint decisions on multi-factors is crucial for efficient resource allocation in agriculture, promoting sustainable land use, and fostering rural revitalization. Using survey data from 1780 households in the North China Plain, this study used the Conditional Mixed Process (CMP) joint estimation to address potential endogeneity issues and investigate the interaction of off-farm employment, farmland transfer, and agricultural capital investment. First, the results reveal a significant relationship between the three factors in farmers’ decision-making. Particular, there is a positive relationship between off-farm employment and farmland outflow (ρ = 0.163, P < 0.05), while a negative correlation is observed between farmland outflow and capital investment (ρ = − 0.476, P < 0.01). Secondly, there is heterogeneity in the correlation of joint decision-making regarding off-farm employment types and agricultural capital input types. For risk-averse farmers and farmers with low capital liquidity, off-farm employment is not significantly correlated with farmland outflow, while farmers with land-poor farmers have the strongest positive correlation between farmland inflow and capital input. Third, even if increasing farmland outflow can facilitate the expansion of large-scale land operations, the investment effect of off-farm employment remains unrealized. Finally, the lag of the farmland transfer market relative to the labor transfer market and the rural capital market hinders the growth of optimal-scale agricultural management.