How does off-farm work participation of farm couples affect household land transfer choices? An empirical investigation

Abstract

Off-farm work plays a significant role in diversifying rural income and reducing risks generated from relying solely on agricultural production. Prior studies have examined the association between off-farm work participation and land use behaviors of rural households, but little attention has been paid to the effects of the joint off-farm work decisions of farm couples on land transfer choices. To bridge this gap, this study investigates the determinants of farm couples’ off-farm work participation, using a seemingly unrelated bivariate probit regression model and survey data collected from Hubei province of China. We also estimate the impact of the joint off-farm work decisions of farm couples on land transfer choices by employing a multinomial logit model and controlling for the endogeneity issues of off-farm work variables. The empirical results show that farm couples are jointly making decisions to work off the farm, but their decisions affect household land transfer choices differently. In particular, we show that the husbands participating in the off-farm work are more likely to rent in land, while their wives are less likely to do so. Both the husbands and wives are more likely to rent out land if they work off the farm. Our findings highlight the importance of farm couples’ off-farm work decisions in stimulating the development of rural land rental markets.