Land Endowment and Parental Educational Investment in Rural China

Abstract

Education is fundamental to enhancing the quality of life and ensuring social and economic progress. However, the divisive economic structure separating urban and rural areas in China led to insufficient educational investment in rural China, and trapped farmers’ children in the agricultural sector. Land is one major asset of rural households, and can generate income or be mortgaged for credit used for educational investment. This study explored the relationship between land endowment and parental educational investment of rural households, from both theoretical and empirical perspectives, breaking down the effect of land endowment into two different components for the better promotion of educational investment. Based on data from a 2018 survey in Jiangxi Province, where rural education investment is severely restricted by the level of economic development, this study shows that the income and wealth effects of land endowment exists, and both increase the probability of educational investment. The wealth effect dominates the income effect when the households managed large-scale land or owned more land with contract rights. However, when the land endowment was less than a threshold of 3.85 mu, the wealth effect was replaced by the substitution effect, which conversely restrained educational investment for small-scale farmers in rural China. These findings highlight the importance of large-scale farmland as a mortgageable, or income-generating, asset in stimulating educational investment. Therefore, China should continue adhering to reform through the market-oriented land transfer system, with the government actively playing a role in ensuring the stability of land transfer and the security of land management rights, and increasing productivity for a high agricultural income to achieve sustainable educational investment.