Rural Land Circulation and Peasant Household Income Growth—Empirical Research Based on Structural Decomposition

Abstract

How rural land transfer affects the growth of non-agricultural income and the changes in its sources are important research topics. This study uses the micro-data from the China Family Panel Studies (CFPS) spanning from 2014 to 2020 and empirically analyzes the impact of rural land transfer on the growth of non-agricultural income, based on a multi-dimensional decomposition of rural household income structure. This study found that (1) land transfer has a significant promoting effect on the growth of non-agricultural income. Transferring out land is conducive to increasing wage income and transfer income, while transferring in land compensates for the decrease in operating income by achieving a higher operating income, ultimately leading to an increase in total income. (2) The effect of land transfer on the growth of non-agricultural income is higher in the Eastern region than in the Central and Western regions. The higher the education level of family members, the greater the income-increasing effect of land transfer on farmers. (3) Mechanism analysis shows that land transfer increases farmers’ opportunities for migrant work and improves farmers’ operational efficiency, which are the main channels for the growth in non-agricultural income. This study demonstrates that land circulation will promote farmers’ income growth and prosperity through rental income, share cooperation and dividends, labor transfer and wage income, industrial chain extension and value-added income, and policy support and subsidies.