Agricultural land marketization and productivity: evidence from China

Abstract

The marketization of agricultural land affects the average land productivity not only through improving land allocation efficiency but also through reducing land price under the perfect market. The effect of the improvement of land allocation efficiency on the average land productivity is positive. However, when the agricultural land market is imperfect, the effect of the decrease in land price under the perfect market on the average land productivity is negative. By using the China Health and Nutrition Survey (CHNS) database and the empirical framework for the inverse relationship between farm size and land productivity, this paper empirically finds that these two channels improve and reduce average land productivity by 34.4% and 1.4%, respectively, implying that agricultural land marketization in China improves the average land productivity by 32.9%.