Household Livelihood Strategy Changes and Agricultural Diversification: A Correlation and Mechanism Analysis Based on Data from the China Family Panel

Abstract

Social and economic transformations have a profound impact on farmers’ livelihood strategies, and changes in these strategies, in turn, deeply impact the agricultural system. Based on four waves of China Family Panel Studies (CFPS) tracking data, this paper uses a Markov transfer probability matrix to explore changes in farmers’ livelihood strategies and builds multiple logit and fixed-effect models to empirically analyze the impact and lag effect of these changes on agricultural diversification. The results show that (1) farmers who choose not to shift away from an agricultural livelihood show no significant change in agricultural diversification. Compared with households showing an increase in the agricultural diversification index, households showing a decrease in this index are more inclined to diversify if they choose to maintain an agricultural livelihood either part-time or full-time. For households with an unchanged agricultural diversification index, their index value is more likely to remain unchanged if they choose to maintain a part-time or full-time agriculture-oriented livelihood. Moreover, (2) the impact of livelihood strategy changes on agricultural diversification displays regional heterogeneity. The index value of farmers in the central region shows no statistically significant change over the sample period, while the index value of farmers in the eastern region increases. Farmers in the eastern and central regions with unchanged index values are more inclined to show persistent index values. (3) Changes in farmers’ livelihood strategies have a lag effect on agricultural diversification that becomes significant at two lag periods.