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How Does the Land Rental Market Participation Affect Household Efficiency? Evidence from Rural China.
Xiaolin Guo1, Guanming Shi2, Linyi Zheng3,4
1West Institute for Economic Research, Southwestern University of Finance and Economics, Chengdu 611130, China.
International Journal of Environmental Research and Public Health
|December 11, 2022
Summary
Rural land rental markets impact household efficiency. Renting land in boosts technical efficiency, while renting out land improves allocative efficiency, with farm size playing a key role.
Area of Science:
- Agricultural Economics
- Rural Development
- Household Efficiency Analysis
Background:
- The land rental market is crucial for inter-household efficiency in rural economies.
- Household diversification and land transfer dynamics are key factors influencing efficiency.
- Understanding the impact of land rental market participation on rural household efficiency is essential.
Purpose of the Study:
- To estimate rural household efficiency considering diversification.
- To analyze the effect of land rental market participation on household efficiency.
- To explore the role of farm size heterogeneity in efficiency differences.
Main Methods:
- Utilized nationally representative household panel data from China (2017-2019).
- Employed a control function approach to analyze land rental market participation effects.
- Examined technical efficiency and allocative efficiency.
Main Results:
- Mean technical efficiency was 0.45 (2017) and 0.44 (2019); allocative efficiency was 0.64 (2017) and 0.66 (2019), indicating efficiency losses.
- Renting land in improved technical efficiency but not allocative efficiency.
- Renting land out decreased technical efficiency but increased allocative efficiency.
- Farm size heterogeneity significantly impacts efficiency, with larger farms showing advantages.
Conclusions:
- Land rental market participation has differential effects on technical and allocative efficiency.
- Farm size is a critical determinant of efficiency gains from land rental.
- Policy suggestions are provided to stimulate the land rental market under diversification.
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