Does land renting-out increase farmers’ subjective well-being? Evidence from rural China

ABSTRACT

Although the literature finds that renting out farmland can increase farmer’s income, whether lessors’ subjective well-being (SWB) increases or not has been under-analysed. We use data from the 2015 China Household Finance Survey to investigate the relationship between land rental transaction and farmers’ SWB. The results indicate that renting-out farmland does not increase farmers’ SWB if ignoring the types of transaction partners. Further analysis shows that lessors transacting with acquaintances have higher SWB than those transacting with non-acquaintances, and there is no difference in SWB between lessors transacting with non-acquaintances and farmers without land renting-out. This is because although lessors transacting with non-acquaintances obtain higher land rents, they lose the farmland that is the channel of investing in social capitals, which leads to less helps from kin, friends or neighbours when they encounter difficulties. Our analysis implies that lessors’ subjective welfare does not increase even if rural economy and rural residents are commonly regarded to be beneficial from land transfers.

KEYWORDS:

• Subjective well-being
• land renting-out
• land rents
• social capital

JEL CLASSIFICATION:

• Q15
• D69

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ It should be noted that only lessor’s SWB is analysed in this paper. This is because the first aim of land transfer policies in China is to encourage smallholder farmers’ land renting-out, which is the precondition of land scale management. Moreover, farmer is the owner of land contractual rights, so the allocation of land use rights has more direct impact on them. Additionally, smallholder farmers’ land renting-out is most common in rural China, and their subjective welfare has important effects on the implementation of Chinese rural policies.

² Relational assets refer to the intangible, behavioural, and normative practices that influence interfirm behavioural and firm and regional competitiveness (Pickles 2017). Relational capital can also be defined to be the useful knowledge and information gathered by the firm in its relationships with its customers, suppliers, allies, competitors and so on. In this paper, considering the fact that farmland in rural China is commonly transferred between acquaintances to maintain close social relationships and accumulate social capitals, effective cooperation and community support provide farmers with information, useful knowledge and helps when they encounter difficulties. Therefore, to a considerable extent, farmland can be defined to be a kind of relational assets, or an important instrument to accumulate relational assets.

³ In this paper, the feeling of happiness is used to measure SWB, following Frey (2008).

⁴ Besides the supporting literature about SWB, several psychological researches propose that attitude is one kind of persistent response tendency (Taylor, Peplau, and Sears 2006). SWB is the overall evaluation about life, and it is formed through a long process and cannot be changed easily because the overall evaluation about attitude object cannot always be changed. Von Hecker (1993) proposes that people prefer consistency of the cognition constituting attitude. When the former attitude is inconsistent with the later, cognitive dissonance then emerges and this will result in psychological stress and negative emotion (Harmon-Jones 2000). In other words, people would not like to change their attitude.

⁵ Majority of literatures propose that impersonal transactions in Chinese land rental markets are based on trust or close social relationships, and they are always accompanied with zero or low rents (Feng et al. 2010; Ma et al. 2015). However, market-oriented land rentals are conducted for profit and then follow price mechanism instead of social relationships. Qiu et al. (2020) have also empirically found that the land rents of market-oriented land rentals are higher than those of impersonal land rentals based on the CHFS data.

Additional information

Funding

This work was supported by the National Social Sicience Foundation of China [20FGLA004] and the National Natural Science Foundation of China [71742003].