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

Author

Listed:
  • Tianxiang Li
  • Wusheng Yu
  • Tomas Baležentis
  • Jing Zhu
  • Yueqing Ji
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.

Suggested Citation

  • Tianxiang Li & Wusheng Yu & Tomas Baležentis & Jing Zhu & Yueqing Ji, 2017. "Rural demographic change, rising wages and the restructuring of Chinese agriculture," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 9(4), pages 478-503, November.
    • Handle: RePEc:eme:caerpp:caer-02-2016-0025
    DOI: 10.1108/CAER-02-2016-0025
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    Citations

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    Cited by:

    1. Yang, Zhiyuan & Zhu, Yuemei & Zhang, Jinyue & Li, Xuyi & Ma, Peng & Sun, Jiawei & Sun, Yongjian & Ma, Jun & Li, Na, 2022. "Comparison of energy use between fully mechanized and semi-mechanized rice production in Southwest China," Energy, Elsevier, vol. 245(C).
    2. Zhoufu Yan & Shurui Zhang & Fangwei Wu & Binlei Gong, 2023. "Increasing Wages, Factor Substitution, and Cropping Pattern Changes in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 31(5), pages 190-214, September.
    3. Jiandong Chen & Sishi Rong & Malin Song, 2021. "Poverty Vulnerability and Poverty Causes in Rural China," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 153(1), pages 65-91, January.
    4. Md.Salamun Rashidin & Sara Javed & Bin Liu & Wang Jian, 2020. "Ramifications of Households’ Nonfarm Income on Agricultural Productivity: Evidence From a Rural Area of Pakistan," SAGE Open, , vol. 10(1), pages 21582440209, January.
    5. Liu, Xinyue & Wang, Xiaobing & Xu, Zhigang, 2023. "The polarization and constraints of scale farming in China under the impact of rising wages," Journal of Asian Economics, Elsevier, vol. 86(C).

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