Abstract
The development of agricultural services was the most important change in China’s agricultural production in the past 20 years. Using nationally representative provincial-level panel data, this study shows that agricultural service has a positive impact on technical efficiency at a significance level of 0.06. Based on this study, if the share of agricultural service cost increases by 1%, technical efficiency will increase by 0.35%. In other words, this study provides an empirical explanation of the positive impact of agricultural service on productivity. Due to the heterogeneity of agricultural service, technical efficiency in Eastern China and major grain production regions is higher than that in other regions. Finally, this study confirms the convergence of technical change in China’s grain production.
Highlights
IntroductionAs in other developing countries where there were millions of small households, China had a large pool of surplus labor in rural areas after the agricultural reform at the end of 1970s [1,2,3,4]
Agricultural service in China was unimportant until the early 2000s
As more farmers migrated to cities, agricultural service developed rapidly in the past two decades in China
Summary
As in other developing countries where there were millions of small households, China had a large pool of surplus labor in rural areas after the agricultural reform at the end of 1970s [1,2,3,4]. A rapid increase in wage rates significantly changed the development of agricultural service since the early 2000s. It was thought that there were millions of surplus laborers in rural China, the Lewis turning point appeared with repeated reports of a shortage of laborers and a rapid increase in wage rates in the early 2000s [13,14,15,23].
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