The Impact of Positive Agricultural Income Shocks on Rural Chinese Households
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World Bank, Washington, DC
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In the post-collectivization period,
rural Chinese households were required to sell part of their
grain output to the state at a below-market price; however,
increases in this quota price beginning in 1993 generated
substantial positive income shocks. These income shocks also
varied cross-sectionally in accordance with crop composition
given that quotas were systematically larger for
rice-producing households, generating a quasi-random source
of variation in the size of the shock driven by climatic
variation in suitability for rice cultivation. Households
induced to experience relatively larger income shocks show
evidence of decreased agricultural investment, increased
investment in non-agricultural businesses, and increased
migration as households gain increased income, consistent
with the hypothesis that credit constraints may have
constrained some households from entering non-agricultural
production ex ante. In addition, there is evidence that
these households were concentrated among households who had
not previously diversified out of agriculture.
Palabras clave
AGRICULTURAL INVESTMENT, INTERNAL MIGRATION, HOUSEHOLD WELFARE, DIVERSIFICATION, RICE CULTIVATION, INCOME SHOCK, INVESTMENT, SMALL AND MEDIUM-SIZED ENTERPRISES, MICROENTERPRISES, RURAL LABOR, PRICES