Farmers, Rural Areas, and Agricultural Development (Institutional Analysis and Empirical Examination)

Author: Wu Shanlin
Publisher:
Publish Date: 2006-01-01
Features: This book covers eight related topics. For each topic, I intentionally present it in the form of a formal paper (which somewhat makes the book resemble a collection of papers). The purpose of this approach is to allow for a more focused discussion when addressing each topic, thereby increasing the information density of the text. However, these eight topics can be divided into three parts. Chapters 1–3 form one part, discussing theoretical issues related to the institutional changes in China's rural economy; Chapter 4 forms another part, discussing the development trajectory and experience of China's agriculture (such as grain production); and Chapters 5–8 form the final part, which, under the framework of farmers, rural areas, and agricultural development in China, explores the determinants of farmers' income and labor mobility. The themes and connections of each chapter within the parts are as follows:
Chapter 1 provides a feasible theoretical perspective for evaluating the efficiency of institutional changes in the rural economy. The basic belief I aim to establish is that, both theoretically and empirically, the efficiency of institutional change depends on the degree of "consensus" between the government and individuals regarding the change. The rich experiences and lessons from China's institutional changes in the rural economy offer ample material for testing the proposed theory.
Chapter 2 builds on the ideas of Chapter 1, aiming to conduct a historical comparative analysis of China's institutional changes in the rural economy and household agricultural production behavior based on theories from new institutional economics. The chapter's features include considering both the requirements of agricultural production characteristics for institutional arrangements of agricultural production organizations and the agricultural production organization arrangements that have been or are currently in practice in China's socioeconomic context. It combines the behavioral responses of households under the existing institutional system with the resulting production efficiency, placing the historical comparative analysis within the broader context of the convergence or divergence of government preferences and farmer preferences. Notably, in this chapter, the household operations coexisting with the production team period and collective economy of the production team are incorporated into a unified and simple analytical framework, and the evolution of the household responsibility system is examined accordingly. This line of reasoning is further developed in Chapter 3. The chapter attempts to explore several possible pathways for the transformation of agricultural organizational forms from the production team model to household operations through a simple household behavior choice model. Additionally, it analyzes the characteristics of institutional changes in agricultural production organization, taking into account agricultural production features, changes in government preferences, and natural and geographical conditions.
Based on common economic knowledge, market-oriented reforms will have a profound impact on all aspects of socioeconomic life. From the perspective of comparative advantages domestically, differences in agricultural resource endowments between regions will reflect in the characteristics of regional changes in grain production. With the diversification of farmers' use of production factors, the development of non-agricultural industries will also significantly influence the development of agriculture and grain production. Given these considerations, Chapter 4 discusses the main economic reasons behind the characteristics of regional changes in grain production since China's market-oriented reforms. The chapter first conducts dynamic calculations and statistical analyses of the proportion of grain output in each province to the total national grain output (1982–1998), describing the characteristics of regional changes in China's grain production from multiple dimensions and compiling a comprehensive index of regional grain production characteristics. Using this as the dependent variable, the (statistical tests) in the chapter show that rural per capita cultivated land resources and the pull of non-agricultural industry employment are important influencing factors for China's regional grain production characteristics.
Chapter 5 provides a brief discussion on the prerequisites for the healthy development of farmers, rural areas, and agriculture in an open economy. The chapter's idea is that the development model of farmers, rural areas, and agriculture must form and optimize itself on the track of continuous expansion and deepening of the market; reforming the existing household registration system to restore true choice rights to rural residents, accelerating the development of rural basic education, coordinating urban-rural population development, and adjusting the layout of the national economic center are key to achieving these prerequisites.
Chapter 6 raises the question of the nature of income farmers derive from agricultural production. The chapter focuses on whether, when income from agricultural production is divided into wage income and operating income, what proportion each part accounts for. The significance of this division is obvious, as solving this question will make the direction of rural tax reforms clearer. The calculations in the chapter show that, under China's current institutional system and cultivated land resource conditions, a significant portion of agricultural income belongs to wage income, while operating income accounts for only a small proportion. Moreover, since the reform and opening-up, China's agricultural income growth has been slow, and the proportion of agricultural income in rural residents' total net income has experienced cyclical changes, playing no significant role in regional disparities in rural residents' per capita total net income. The parallel implementation of the abolished agricultural tax system and the individual income tax system has led to unequal tax burdens between urban and rural residents, while the "fee-to-tax" reform aimed at standardizing farmers' extra-tax burdens has had limited effectiveness in reducing their burdens. The chapter's findings suggest that reforms to the agricultural tax system should take the individual income tax levied on urban residents' wages as a reference.
Chapter 7 addresses the flaws in existing literature estimating the returns to education for Chinese farmers by estimating the total income effects of farmer education from both temporal and regional dimensions. The main conclusion of the chapter is that China's returns to farmer education are not only significantly higher than existing estimates but also show an upward trend; the total returns to education for farmers in central and western regions are also much higher than those in eastern regions. Such estimates reflect both objective institutional foundations and subjective farmer rationality, carrying strong policy implications.
Chapter 8 proposes a new concept and estimation method for agricultural surplus labor. The two existing concepts of agricultural surplus labor either start from the perspective of constant agricultural output or constant agricultural labor input, while the definition in this chapter is based on constant agricultural income. However, the chapter proves that under a specific scenario close to reality, these three concepts are equivalent. The proposed concept has a significant advantage: there exists a simple estimation method. The estimation method proposed in this chapter has general significance, with existing neoclassical estimation methods being just a special case of it. The specific estimation of agricultural surplus labor in China from 1985 to 2003 shows that the estimation method in this chapter outperforms empirical algorithms; economic growth has a lagging and inverse effect on the proportion and scale of agricultural surplus labor.