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Rural demographic change, rising wages and the restructuring of Chinese agriculture

Rural demographic change, rising wages and the restructuring of Chinese agriculture PurposeThe purpose of this paper is to identify the effects of recent demographic transition and rising labor costs on agricultural production structure and pattern in China during 1998-2012.Design/methodology/approachThe authors, first, theoretically discuss the effects of changing relative input prices due to rising labor cost on producers’ decisions regarding input mix (substitution effect), output level, and product quality (output effect). A logarithmic mean Divisia index decomposition method is then applied to empirically identify these effects at aggregated levels, followed by an analysis based on the visualization of land use indicators on changing cropping patterns across Chinese provinces.FindingsThe authors find that tightened effective agricultural labor supply and rises in rural labor costs are associated with divergent changes in input mixes and output choices across products. Producers of land-intensive products focusing more on input mix adjustment, while those of labor-intensive products seem to more likely to adjust output choices. Producers’ adaption strategies also varied across Chinese provinces due to natural conditions, leading to shifts and concentrations in the regional distribution of agricultural products, with lower-value bulk products concentrating in the plain areas, whereas higher-value horticulture products increasingly prevailing in sloped areas.Originality/valueThis paper illustrates how adjustments in input mixes and output choice in Chinese agriculture counteracted disadvantages caused by rising labor costs and how such adjustments are product and region specific. Based on these observations, implications regarding further innovations in production technology and institutional arrangements needed within China’s agricultural sector are highlighted in the paper. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png China Agricultural Economic Review Emerald Publishing

Rural demographic change, rising wages and the restructuring of Chinese agriculture

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1756-137X
DOI
10.1108/CAER-02-2016-0025
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to identify the effects of recent demographic transition and rising labor costs on agricultural production structure and pattern in China during 1998-2012.Design/methodology/approachThe authors, first, theoretically discuss the effects of changing relative input prices due to rising labor cost on producers’ decisions regarding input mix (substitution effect), output level, and product quality (output effect). A logarithmic mean Divisia index decomposition method is then applied to empirically identify these effects at aggregated levels, followed by an analysis based on the visualization of land use indicators on changing cropping patterns across Chinese provinces.FindingsThe authors find that tightened effective agricultural labor supply and rises in rural labor costs are associated with divergent changes in input mixes and output choices across products. Producers of land-intensive products focusing more on input mix adjustment, while those of labor-intensive products seem to more likely to adjust output choices. Producers’ adaption strategies also varied across Chinese provinces due to natural conditions, leading to shifts and concentrations in the regional distribution of agricultural products, with lower-value bulk products concentrating in the plain areas, whereas higher-value horticulture products increasingly prevailing in sloped areas.Originality/valueThis paper illustrates how adjustments in input mixes and output choice in Chinese agriculture counteracted disadvantages caused by rising labor costs and how such adjustments are product and region specific. Based on these observations, implications regarding further innovations in production technology and institutional arrangements needed within China’s agricultural sector are highlighted in the paper.

Journal

China Agricultural Economic ReviewEmerald Publishing

Published: Nov 6, 2017

References