Abstract
This study investigates the effects of a household head’s participation in wage work on farm productivity in China. To this end, we use a Chinese household income survey from 2002, which includes 4,391 households in 22 provinces, autonomous regions, and directly administered municipalities. For this data set, we estimate stochastic production frontiers (SPF) separately for farm households whose head is a wage worker (households with a wage worker) and those whose head is not a wage worker (households without a wage worker). After estimating SPF for each group of households, we compare the deterministic production frontiers and technical efficiency. The empirical results for the eastern and central regions show that typical households with a wage worker tend to have lower farm productivity because of their lower technical efficiency. This lower technical efficiency is due to their smaller farm land. To improve technical efficiency in these regions, the government should try to make the land market more active and allow farm households to expand their land.
The empirical results for the western region show that typical households with a wage worker may have higher farm productivity because of their higher technical efficiency. This higher technical efficiency is due to better education of the household head and better utilization of farming knowledge and family members. However, the higher technical efficiency depends on more farm work being carried out by women and the elderly, which might not be sustainable in the future. To address this concern, the government should encourage farmers to use more farm machinery and newer varieties of crops so that their production frontier can shift upward.
