Rural demographic change, rising wages and the restructuring of Chinese agriculture
Abstract
Purpose
The 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/approach
The 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.
Findings
The 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/value
This 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.
Keywords
Acknowledgements
The first author acknowledges financial support from the China Postdoctoral Science Foundation. He is also thankful for the China Scholarship Council for the China Postdoctoral Science Foundation. He is also thankful and the University of Copenhagen for supporting and hosting his visit in Denmark while finalizing this paper. Support by PAPD of Jiangsu Higher Education Institutions, China Center for Food Security Studies, Jiangsu Center for Food Security Studies, the Fundamental Research Funds for the Central Universities (Project No. SKCX2017002) and NSFC of China (Project No.7167031193 and 71773051) is acknowledged by the authors of the paper. Helpful comments and suggestions from two anonymous reviewers are appreciated. The authors would also like to acknowledge the many valuable and detailed comments and suggestions from the associate editor in charge of this paper. The usual disclaimers apply.
Citation
Li, T., Yu, W., Baležentis, T., Zhu, J. and Ji, Y. (2017), "Rural demographic change, rising wages and the restructuring of Chinese agriculture", China Agricultural Economic Review, Vol. 9 No. 4, pp. 478-503. https://doi.org/10.1108/CAER-02-2016-0025
Publisher
:Emerald Publishing Limited
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