– The purpose of this paper is to examine key determinants of farm labor market development in rural China.
– Probit, Logit, and IV-Probit model are used to provide pertinent empirical analysis.
– Analysis of survey data establishes three facts about the farm labor market in rural China: first, households with high farm endowment are more likely to hire farm labor; second, because of the mismatch between farm ability and land size created by egalitarian land reallocation, households with more land reallocations are more likely to participate in farm labor market to adjust such mismatch; third, land rental market and farm labor market seem to be complementary. These results are robust to alternative model specifications, subsamples, alternative dependent variables, and additional controls. Welfare analysis demonstrates that the farm labor market is conducive to agricultural output.
– The main contribution of this study is to lay out stylized facts in terms of the development of farm labor market using a unique survey data set.
