Effects of Labor Price Hike and Population Ageing on Rural Land Lease in China*

China Economist - - Articles - Yang Jin ( 1 ) and Chen Zhigang ( ) 2 1 School of Economics, Huazhong University of Science and Technology (HUST), Wuhan, China 2 International Food Policy Research Institute (IFPRI), Beijing, China * Corresponding author: Yang Jin, School of Economi


In answering the questions as whether China’s rising labor price and ageing workforce have affected rural land leasing and whether these factors have any joint effect, we have employed RCRE data of the Ministry of Agriculture to carry out an empirical analysis and the result indicates that labor price hike has significant positive effects on both the land lease-in and lease-out of rural households, i.e. labor price hike will help increase the land leasing of rural households. At the level of ageing workforce, our empirical results indicate that ageing workforce does not create any significant impact on rural land leasing market no matter for land lease-in or lease-out in overall samples, plain regions and mountainous regions. In our empirical analysis on whether ageing workforce will intensify or weaken the effects of labor price hike on rural land leasing market, the regression result also indicates that there is no significant effect from a statistical perspective.


labor price, ageing, land leasing JEL Classification Code: J31, P23, Q15

1. Introduction


China’s fragmented and small- scale agricultural production is beleaguered with rising cost of labor and diminishing agricultural workforce (Cai Fang, 2007). As such, it becomes increasingly important to promote agricultural mechanization and increase economies of scale. At the heart of China’s rural economy is rural land system with associated economic and social security functions (Luo Biliang, 2013). Due to these important functions, it is difficult to revamp rural land system in the short run. Hence, land leasing among rural households became a feasible option in increasing agricultural economies of scale.

China’s burgeoning industrial economy since reform and opening up in 1978 unleashed tremendous demand for non- skilled workers, 陈志钢 giving rise to double-digit growth of labor price since 2004 (Cai Fang, 2007; Zhang et al., 2013). For farmers, the rising price of labor means higher opportunity cost of agriculture. As rational men, rural residents will shift the focus of their

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