Rural Households' Participation In Non-farm Business Under The Perspective Of Social Capital

Based on the CHIPS data, this paper examines the effect of social capital on China's rural households'participation in non-farm business and how this influential role of social capital changes with the development of marketization.Literature reviews on social capital come to a conclusion that people across different time durations and spatial positions with different social status vary in their total amount of social capital, which accordingly restrict their social action in different ways. So this article assumes that farmers active in accumulating social capital may acquire advantageous position in non-agricultural development, and we try to build Probit model to test the hypothesis in Chapter 4. Several initial conclusions are drawn by using the Probit Model:different dimensions of social capital take an effect on farmers'involvement in non-agricultural business in different ways in rural China. To be specific, quality of social networks, trust and reciprocity dimensions of social capital take a significant positive effect on the non-farm business, while social network size's effects on farmers engaging in non-agricultural business is not statistically significant. In consideration of migrant working in China, the author use bivariate Probit model to test the stability. Results demonstrate no confounding bias between the participation in non-farm business and migrant working, and each has its distinct mechanism of action. So conclusions are convincing.To examine the changing role of social capital with the development of marketization, an interaction term of social capital and provincial market index is constructed in Chapter 5. To ensure a good stability of the model, this paper discusses collinearity among several explanatory variables, and then we investigate endogenous problems in trust and public participation. Endogenous biases are adjusted by using the effective tool variable of average community public participation. Actually, influence of public dimension of social capita on non-farm households is not significant as has been previously found. Empirical study shows that apart from the reciprocal dimension, the impact of social capital on participation in non-farm business continues to wane with the development of marketization. The article also finds that social capital's effect (including dimensions of network size, trust and public participation) on farmers'involvement in non-agricultural business will be increasingly weak during the development of marketization.Two main conclusions are drawn from this paper:On one hand, informal regime such as social network based on interpersonal relationship will continue to play an important part in the development of non-farm Chinese rural households. On the other hand, the effect of social capital tends to wane in advancement of marketization. The reason is that the development of modern market economy strongly impacts Chinese social structure which is based on genetic relationship. And the influential role of social capital embedded in the social structure is inevitably weakened to some extent. Finally, policy implications are provided in accord with those conclusions.