Rural Households Decisions Towards Income Diversification: Evidence from a Township in Northern China
GATE (Groupe d’Analyse et de Théorie Économique) Working Paper 09-23
27 Pages Posted: 9 Dec 2009 Last revised: 8 Oct 2010
Date Written: November 1, 2009
Economic reforms in rural China have brought opportunities to diversify both within-farm activities and off-farm activities. Participation in these activities plays an important role in increasing rural households’ income. This paper analyzes the factors that drive rural households and individuals in their income-source diversification choices for ten villages in Northern China. At the household level, we distinguish three types of diversification as opposed to grain production only: within farm (non-grain production) activities, local off-farm activities, and migration. At the individual level, we analyze the determinants of participation in three different types of jobs as compared to agricultural work: local off-farm employment, local self-employment and migration. At the household level, we find that land and labor availability stimulates on-farm diversification. Local off-farm activities are mostly driven by household wealth and credit constraints, while migration decisions strongly depend on the household age and composition. At the individual level, we find a clear gender and age bias in access to off-farm activities that are mostly undertaken by male and by young people. More surprisingly, education is found to play a role for accessing local wage employment but not in migration decision. As at the household level, the household assets position is found to strongly affect participation in any off-farm activity.
Keywords: income-source diversification, agricultural households, off-farm employment, China
JEL Classification: J2, R2, Q1, O53
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