Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Machinery Investment Decision and Off-Farm Employment in Rural ChinaYueqing Ji *, Funing Zhong**, and Xiaohua YU*** *College of Economics and Management, Nanjing Agricultural University Nanjing, China; jiyue_qing@163.com **College of Economics and Management,Nanjing Agricultural University, Nanjing, China; fnzhong@njau.edu.cn ***Courant Research Centre "Poverty, Equity and Growth" , University of Goettingen, Goettingen, Germany xyu@gwdg.de; +49-551-3910678Corresponding Author: Xiaohua YU Copyright 2010 by [Yueqing Ji, Funing Zhong, and Xiaohua Yu].All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies.Abstract: This paper investigates the linkages between farmers' machinery investment decision and off-farm employment in China. Both the theoretical model and the empirical results based on a survey of 453 households in Anhui Province indicate that agricultural labor input and small-size machinery investment are gross complements rather than substitutes when machinery service is available in the market. Consequently, farmers with small machinery are more likely to reduce their off-time employment time. JEL : Q12

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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.

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