TY - JOUR

T1 - Rural demographic change, rising wages and the restructuring of Chinese agriculture

AU - Li, Tianxiang

AU - Yu, Wusheng

AU - Baležentis, Tomas

AU - Zhu, Jing

AU - Ji, Yueqing

PY - 2017

Y1 - 2017

N2 - 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.

AB - 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.

U2 - 10.1108/CAER-02-2016-0025

DO - 10.1108/CAER-02-2016-0025

M3 - Journal article

VL - 9

SP - 478

EP - 503

JO - China Agricultural Economic Review

JF - China Agricultural Economic Review

SN - 1756-137X

IS - 4

ER -