A Study On Land Rent And Agriculture Productivity

The allocation of land resources is crucial to one country’s economic development. Since 1978, the implementation of household contract responsibility system has changed people’s commune large in size and collective in nature, which significantly improve farmers’ enthusiasm for production. At the beginning of China’s reform and open up, Chinese economy has made a great impact and played an important role for agricultural production(Lin,1992; Mc Milan et al.,1989). However, household contract responsibility system counter various limitations during the actual operation procedure, the allocation for land resources is distribute by average farmer’s household population. This type of distribution caused farmers, land reduced, and fragmentation of the field. On the other hand, the egalitarians tend to ignore farmers’ consistency in agricultural production, which in result of mismatch of scale and efficiency. The defects of household responsibility system have restricted the further development of agricultural production in China. Land circulation is a necessary means to further improve the efficiency of land resource allocation. However, both land transfer rate and the efforts still needed to improve. During the 21 st century, especially since the Eighteenth National Congress of the CCP, many documents regarding China’s rural land circulation(such as the year 2014 “No.1 file”, the CPC Central Committee, the State Council “Land management right and development of agriculture management advice” etc.) have been introduced. The pace of circulation of rural land has increased. At the same time, the food security in China is one of the constraints China has to deal with. The agricultural production has a long way to go. One of the key elements for agricultural production is the land. Therefore, Land circulation is bound to have an impact on agricultural production and food security. There are two important questions need to be answered. First, what are the influence and mechanism for the land circulation? Second, how much impact does the agricultural production have after the land circulation? These prospective are the motivation for this study.In order to answer these questions, this study use National Fixed Points Survey in Shanxi(1986-2012) as a case study, based on the growth accounting to explain the land circulation condition of agricultural production. In combination with economic growth and latest procedure to evaluate the current land system loss of efficiency(in other words, the efficiency improvement of land circulation). Based on the micro data of detailed description and analysis of the sample farmers changed in land management scale, sample description of the land management behavior of farmer households in Shanxi, discovered the regulation for farmers’ land scale adjustment to the main focus on the rural land transfer. From frequency, intensity of land circulation, price for land transfer to fully describe the historical trend and the status of farmers’ land circulation; further analyze the the relationship between land rent and household’s income, geographical position and other aspects of the same household. Through the comparison of in and out agricultural production efficiency, and to a preliminary analysis of farmer household’s rational behavior. Then, based on the detailed data, we empirically analyze the factors affecting household’s land rent behavior and reveal the land transfer condition mechanism on agricultural production. Finally, we evaluate productivity gains from land rental based on Olley and Parks(1996). Through this study, we can conclude that:First of all, the current land allocation has been distorted. Through the regression, the study found the coefficient of sample farmers output per mu and land input, labor productivity and output share is siginificantly negative. These regression results means households which have higher labor efficiency and land efficiency have less factor inpus. On the other hand, although the coefficient between TFP and output share is positive, it is much less than 1. All of results show the current land allocation has been seriously distortedSecondly, household’s land rental behavior is rational. The study directly compares the land efficiency, labor efficiency and investment efficiency among different households. And the result shows higher productivity households tend to rent in land. On the other hand, empirical results illustrate the positive effect between agricultural productivity and household’s land rent-in scale. We also employ change of actural cultivating acreage, net percentage of land rent to measue the extent of household’s land-in behavior. The result shows similar trend as above research and our result is robust. This implicitly demonstrates farmers are rational and we can hold productivity gain from reallocation of land.Lastly, there is dramatical productivity gain through reallocation of land. We evaluate the potencial gain from land reallocation based on Olley and Parks(1996). If land can be allocated effectively, the land productivity, labor productivity, and total factor productivity can increase 213%, 709% and 325% respectively with respect of real condition in year 2004-2012. Comparing the condition that number of input has no relationship with household’s productivity, the increasing of land productivity, labor productivity and total factor productivity can increase 156%, 309% and 233%.There are two main contributions in this thesis:(1) we described the trend and characteristics of Chinese household’s land rent behavior employing detailed micro data from National Fixed Points Survey in Shanxi Province. This is very useful to understand household’s land rent behavior from time dimension and can reflect household’s land rent behavior along with different policies;(2) This research combined on the latest development in growth theory and Chinese rural reality and evaluated the potencial gain from land in. Specificially, based on the detail analysis of households’ s land rent behavior, we demonstrated the mechanism of household’s land rent behavior on agriculture production from growth accounting perspective. Then, we evaluated the potencial gain from resource misallocation perspective and the result shows agriculture productivity can be increased dramatically by reallocating land effectively.