How Does China’s New Rural Pension Scheme Affect Agricultural Production?

Abstract

This study examines the spillover effects of China’s New Rural Pension Scheme (NRPS) implemented in 2009 as a cash transfer program for agricultural production. Based on the data collected by the China Health and Retirement Longitudinal Survey (CHARLS) in four periods (2011, 2013, 2015 and 2018), we employ Seemingly Unrelated Regression to explore how China’s NRPS affects agricultural production. Our findings show that NRPS pensions reduce household operating areas by 1.99 mu and agricultural investment by 1150 yuan, while increasing the labor time of their own agricultural production by 168 h, and farmers in the payment period have a similar impact. This finding is still reliable after a series of robustness tests. Gender heterogeneity analysis indicates that male participation in NRPS is more likely to reduce the actual operating area and increase the labor input of the family, while female participation in NRPS is more likely to reduce the agricultural capital input of the family. Moreover, the in-depth study of agricultural performance shows that the implementation of NRPS helps increase the average output value per mu by 700 yuan and technical efficiency by 0.2%, although this is at the cost of declining labor productivity. This study links the joint decision-making of agricultural production factor inputs with pension schemes and contributes to the development of relevant research, which may provide policy implications for how cash transfer schemes affect agricultural production and agricultural performance in other countries.