Study On The Distributional Effects Of Labor Force Transfer And Land Transfer

Redistribution of labor force within rural areas at the beginning of rural reform provides peasants with more choices and opportunities of income increase. Acceleration of market-oriented reform of rural and urban areas since 1990s leads to the largest migration of population and labor flows in China during the peaceful times. Labor force transfer and more job opportunities, as well as decrease of surplus rural labor, will surely lead to non-agricultural income growth, which would raise the peasants'total income. Many researches have found out that rural labor force outflow make the allocation of resource and elements in labor force export areas more reasonable, have a positive impact on internal rural income growth and income distribution, and play an irreplaceable role in restraining income gap enlargement comparing to income redistribution policies. However, income gap of rural residents is still large and inequality indices of rural residents'total income vary. It is worth attention that great income gap of rural residents'income and inequality of among different areas should be further studied.Former researches on the effects of labor force transfer on rural income gap mainly focus on the role of migrant labor's non-agricultural income in rural income distribution gap. However, the role of labor force transfer in rural income distribution is not limited to non-agricultural income and its distribution. As large number of rural labor moved out, those who remained in rural areas can enjoy increased rural land resources per capita, which could thus lead to increase of their families'agricultural income. But "surplus land" left behind after moving out of labor was not equally distributed among the "surplus" rural households. The flow of these land distribution would impact income distribution of local farmers. If the "surplus land" were concentrated to families with great production, that is, land transfer increase income of high earners in rural areas, it would deepen local income gap; on the other hand, if "surplus land" flow to those with low production, it would mitigate local income inequality. Based on economic theory, this paper studied this phenomenon with empirical methods by constructing an analytical framework of income distribution and land compensation.This study was built on the assumption of basic market of land transfer. Based on this premise, "surplus land" would flow to those who would get the highest payment based on land shares. Payment based on land shares in this study is defined as difference between land management gains and opportunity cost of land managers. Farmers remained in rural areas are not homogenous, some of which can only engage in small-scale agricultural production due to the lack of funds and human capital, and some of which have carried out large-scale land management with their relatively abundant human and financial resources. As different farmers have different resource endowments, their benefits and the opportunity cost of land management will be different.Land management gains of different farmers in different regions vary, so is the opportunity cost. In areas with grain-based products that are difficult to replant high added value products, the land will flow to poor farmers more easily; on the other hand, if the crops grown in the region can be changed, and the surplus land is more likely to flow into rich farmers. Such possibility could be achieved on the premise of changes in crop types, which is not affordable to all farmers and requires human capital and investment.Based on investigation and analysis of 478 farmers in four counties in Zhejiang and Anhui provinces, this paper discusses the effect of different levels of economic development, income levels, natural conditions and farmers'wealth, human and social capital on the amount of land acquired, and analyzes that of land transfer in different regions on farmers'income gap. It is on this basis that specific policy recommendations are made to improve farmers'income inequality in different areas and to increase the income level of poor farmers. The main contents and conclusions stated as follows:Research Point No.1:Impact of farmers'wealth, human and social capital on the amount of land acquiredNon-agricultural employment opportunities, which have a negative impact for farmers on the amount of land acquired, evaluate the opportunity cost of farmers'management the land. The higher the opportunity cost, the lower the land compensation and farmers' acquisition. In other words, under the premise of maximizing family income, farmers are not inclined to seek income growth of agriculture given non-agricultural employment opportunities, which would lead to the reduced demand for land resources.Household wealth has a positive impact on the amount of land acquired, which illustrates that affluent famers face a smaller budget constraints, and can afford large amounts of rent and invest in agriculture. It is only through large areas of land transferred to achieve the potential economies of scale, or through investment in agriculture to gain profit higher than normal that higher opportunity cost of affluent famers can be offset.Research Point No.2:Impact of regional differences on the amount of land acquiredRegional differences have a significant impact on the amount of land transferred to farmers. Two types of regions are distinguished in this paper:one is Zhejiang Province with developed economy, more non-farm employment opportunities, high levels of per capita income, diverse types of crops, higher unit revenue, and an active market of land transfer, the other is Anhui Province is with less developed economy, less non-farm employment opportunities, low levels of per capita income, grain-based crops type, and slow development of land transfer. Compared with that of the second region, amount of land transferred to farmers in the first regions is significantly higher, indicating that surplus lands in the first region are mainly acquired by farmers with great production. While in the second region, surplus lands are mainly transferred among farmers with low production. This shows that which kind of farmers could obtain surplus land related not only to farmers'own wealth, human and social capital, but also to the local economic environment and natural conditions significantly.Research Point No.3:Impact of land transfer on farmers'income gap changes in different regionsActual gini coefficient and simulated gini coefficient under condition without land transfer in four counties were calculated, and the results show that actual gini coefficient in Cixi County is higher than its simulated gini coefficient, while actual gini coefficients of Tiantai, Feixi and Lixin County are lower than their simulated gini coefficient respectively. This indicates that land transfer deepens income gap for farmers in regions with developed economy, more non-farm employment opportunities, changeable types of crops planted and higher yields can change the area, and narrows income gap in the economically less developed regions with less non-agricultural employment opportunities, low per capita income, and food-based crops which is difficult to be changed.Based on the above conclusions, policy implications of this study are as follows. With uneven economic development of different regions, there is a high proportion of non-agricultural economy in economically developed areas with an active labor market. Correspondingly, land rental market is active, and surplus land is concentrated to those farmers with management prominence and thus enlarges their farms. This makes the land further concentrated to the high-income households in rural areas and increases their income. On the other hand, it is difficult for poor farmers to increase their resources and income from land transfer. As a result, land transfer in these areas expand income gap between farmers. In order to improve income distribution in these areas and increase income level of poor farmers, labor force transfer of poor farmers should be paid more attention to improve their human capital and help them better use non-agricultural employment opportunities in real-lives.In economically less developed areas with little non-agricultural employment opportunities, labor market and land transfer market develop slowly that surplus land are usually transferred among farmers with low production. Therefore, in a general sense, land transfer, brought by labor force transfer, might expand poor farmers'land management, and narrows income gap area by increase agricultural income levels. It is much more significant in these areas that agricultural technology of poor farmers is improved to increase their income.