Are farm households’ land renting and migration decisions inter-related in rural China?

Abstract

Economic reforms in rural China have stimulated the development of land and labour markets. The increasing importance of these two markets suggests that they might be closely inter-related, but proper statistical tests are lacking. This paper examines the factors that determine the participation of farm households in land renting and migration, and investigates whether participation in land renting and migration influence each other, using a seemingly unrelated bivariate probit regression. Data from a household survey held in 2000 in three villages in the north-east of the Jiangxi Province were used to estimate the land renting and migration equations. Household characteristics, fixed factors, household land and labour endowments, institutional factors, and land and labour prices were used as explanatory variables in both equations. We found that the error terms of the land renting equation and the migration equation were strongly correlated, confirming that there is a negative relationship between land renting and migration.