Exploring the determinants of on-farm transitions: Evidence from rural China

ABSTRACT

To shed light on the sustainable development of rural areas, we study the determinants of transitions from subsistence farming into either formal agricultural employment or agricultural entrepreneurship based on a recent nationally representative survey dataset. We pay particular attention to the roles of different capital endowments broadly including human, financial, natural, social and political capital. Our results show that human, natural, social and political capital are all important determinants of rural households’ transitions to on-farm employment and entrepreneurship while financial capital plays a limited role. These findings are robust to fully controlling for off-farm transitions as part of the household occupational strategy.

KEYWORDS:

• Rural development
• on-farm transitions
• resource endowments
• labour allocation

JEL CLASSIFICATION:

• D13
• O18
• Q10
• Q12

Acknowledgments

We are grateful to the editor, David A. Peel, and an anonymous referee for their insightful comments. We also thank Biliang Luo, Randolph Bruno, Tian Liu, Jiliang Ma and seminar and conference participants at Brunel, Guangdong University of Foreign Studies, South China Agricultural University, SSEES/UCL, the Chinese Economists Society 2018 China Annual Conference in Hefei and the 30th Chinese Economic Association Annual Conference in the University of Edinburgh for their suggestions. All remaining errors are our own. The financial support of National Natural Science Foundation of China (Grant: 71073155) and National Social Science Foundation of China (Grant: 17AJL031) is acknowledged. The views expressed in this article are those of the authors and do not necessarily represent the official position of the Government Office of the Slovak Republic.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Household Responsibility System was first adopted in agriculture in 1979. In the traditional Maoist organization of the rural economy, farmers were given a quota by the government specifying the quantity of goods to produce. They received a reward for meeting the quota. Going beyond the quota rarely produced a further economic reward.

² ‘Hukou’ is a household registration system, which designates all individuals as either rural or urban residents. In the past, individuals were expected to remain in the area stated in their Hukou and changing either one’s status (from rural to urban) or place of residence was difficult. Even at present, individuals with a rural Hukou have limited access to public goods and services in urban areas.

³ Unlike most other countries, China has a relatively few unique surnames, with 100 most common surnames accounting for 84.7% of the population of the country (see 公安部统计：”王”成中国第一大姓, 有9288万人) (Public Security Bureau Statistics: ‘Wang’ Found China’s #1 Surname, Includes 92.88 m People). Available at: http://news.eastday.com/c/20070424/u1a2791347.html (accessed 28–01-2018). The three most common surnames, Wang (王), Li (李) and Zhang (张) account for 7.3%, 7.2% and 6.8%, respectively, of the Chinese population (92.9mn, 92.1mn and 87.5mn in absolute numbers). However, there are important regional differences in the popularity of surnames. For the purposes of our survey, respondents were asked only whether their name was popular in the village.

⁴ Larger samples were selected in two of the provinces.

Additional information

Funding

This work was supported by the Chinese National Funding of Social Sciences [17AJL031] and National Natural Science Foundation of China [71073155].