Drivers of household entry and intensity in land rental market in rural China: evidence from North Henan Province

Purpose - Economic reforms in rural China have led to the emergence of land and labor markets. The development of rural land-rental markets can improve agricultural productivity and equity by facilitating transfers of land to more productive farmers and facilitating the participation in the non-farm economy of less productive farmers. In contrast to the burgeoning development of off-farm labor markets, the development of rural land-rental market has lagged. The purpose of this paper is to analyze the factors affecting households' entry and transaction intensity in rural land-rental markets, especially the effects of land tenure and off-farm employment. Design/methodology/approach - Based on a field survey data of 479 household in Henan Province in 2009, the authors used Cragg's double-hurdle model to identify the determinants for households' land-rental participation and its transaction amount. Findings - Off-farm employment is one of main driving factor for household's land rent-out decision. Tenure insecurity reduces both the propensity and the magnitude of rental market transactions. Land use certificates significantly contribute to participation in land-rental markets and the rental amount. Originality/value - This paper treats household land-rental market participation as a related two-step process, focussing on both land transfer and its transaction amount. This paper also builds on a broad view, including analysis on both demand and supply side of land-rental market.