Rising wages, mechanization, and the substitution between capital and labor: evidence from small scale farm system in China
This article aims to investigate major factors that led to the observed pace of mechanization and the substitution between labor and machines in rural China. We used commodity‐wise province‐level panel data for more than a quarter of a century from 1984 to 2012. The analysis demonstrated a dramatic...
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| Published in | Agricultural economics Vol. 47; no. 3; pp. 309 - 317 |
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| Main Authors | , , |
| Format | Journal Article |
| Language | English |
| Published |
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Blackwell Publishing Ltd
01.05.2016
Wiley Subscription Services, Inc |
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| Abstract | This article aims to investigate major factors that led to the observed pace of mechanization and the substitution between labor and machines in rural China. We used commodity‐wise province‐level panel data for more than a quarter of a century from 1984 to 2012. The analysis demonstrated a dramatic increase in real agricultural wages in recent years, especially after 2003, in contrast to a relatively stable real machine price. The relative price of machines against agricultural labor has declined in an accelerating way, which contributed to the observed rapid introduction of machines. The elasticity of substitution between labor and machines was large in some commodities, which contributed to a fast substitution of labor by machines. |
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| AbstractList | This article aims to investigate major factors that led to the observed pace of mechanization and the substitution between labor and machines in rural China. We used commodity-wise province-level panel data for more than a quarter of a century from 1984 to 2012. The analysis demonstrated a dramatic increase in real agricultural wages in recent years, especially after 2003, in contrast to a relatively stable real machine price. The relative price of machines against agricultural labor has declined in an accelerating way, which contributed to the observed rapid introduction of machines. The elasticity of substitution between labor and machines was large in some commodities, which contributed to a fast substitution of labor by machines. Abstract This article aims to investigate major factors that led to the observed pace of mechanization and the substitution between labor and machines in rural China. We used commodity‐wise province‐level panel data for more than a quarter of a century from 1984 to 2012. The analysis demonstrated a dramatic increase in real agricultural wages in recent years, especially after 2003, in contrast to a relatively stable real machine price. The relative price of machines against agricultural labor has declined in an accelerating way, which contributed to the observed rapid introduction of machines. The elasticity of substitution between labor and machines was large in some commodities, which contributed to a fast substitution of labor by machines. |
| Author | Huang, Jikun Wang, Xiaobing Yamauchi, Futoshi |
| Author_xml | – sequence: 1 givenname: Xiaobing surname: Wang fullname: Wang, Xiaobing organization: Center for Chinese Agricultural Policy, School of Advanced Agriculture, Peking University, Yiheyuan Road No. 5, Haidian District, 100871, Beijing, China – sequence: 2 givenname: Futoshi surname: Yamauchi fullname: Yamauchi, Futoshi organization: Development Research Group, World Bank, 1818 H St., DC, 20433, NW Washington, USA – sequence: 3 givenname: Jikun surname: Huang fullname: Huang, Jikun email: jkhuang.ccap@pku.edu.cn organization: Center for Chinese Agricultural Policy, School of Advanced Agriculture, Peking University, Yiheyuan Road No. 5, Haidian District, 100871, Beijing, China |
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| Cites_doi | 10.1080/00220389908422572 10.1080/07474930008800481 10.1016/0304-3878(95)00065-8 10.1016/j.chieco.2011.08.001 10.1111/j.1467-8276.2006.00888.x 10.1086/452430 10.1093/ajae/aat027 10.1596/1813-9450-7138 10.1080/00036840210158949 10.1016/j.chieco.2011.07.005 10.1093/ajae/aat028 10.1111/1467-8276.00043 10.1007/BF00158774 10.1007/s11123-009-0145-7 10.1111/1468-2354.t01-1-00005 |
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| Notes | Chinese Academy of Sciences - No. KSZD-EW-Z-021-1; Y02015004 We acknowledge the funding from National Natural Sciences of China - No. 71373255; 71333013 ark:/67375/WNG-947F9SR5-L ArticleID:AGEC12231 Institute of Geographic Sciences and Natural Resources Research - No. 2012RC102; 2012ZD208 istex:EAD0F0BE7D017469E20BCD11B533E0C1CD2339F9 Data Appendix Available Online A data appendix to replicate main results is available in the online version of this article. ObjectType-Article-1 SourceType-Scholarly Journals-1 ObjectType-Feature-2 content type line 23 |
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| References_xml | – year: 1985 – volume: 79 start-page: 882 issue: 4 year: 1989 end-page: 888 article-title: Will the real elasticity of substitution please stand up?: A comparison of the allen/uzawa and morishima elasticities publication-title: Am. Econ. Rev. – year: 1932 – volume: 35 start-page: 63 year: 2003 end-page: 77 article-title: Fishing effort validation and substitution possibilities among components: The case study of the VIII division European anchovy fishery publication-title: Appl. Econ. – volume: 3 start-page: 153 year: 1992 end-page: 169 article-title: Frontier production functions, technical efficiency and panel data: With application to paddy farmers in India publication-title: J. Prod. Anal. – volume: 33 start-page: 191 year: 2010 end-page: 207 article-title: Productivity, efficiency and technical change: Measuring the performance of China's transforming agriculture publication-title: J. Prod. Anal. – volume: 35 start-page: 16 year: 1999 end-page: 44 article-title: Surplus babour and productivity in Chinese agriculture: Evidence from household survey data publication-title: J. Dev. Stud. – volume: 84 start-page: 916 year: 2002 end-page: 930 article-title: The creation and spread of technology and total factor productivity in China's agriculture publication-title: Am. J. Agric. Econ. – volume: 95 start-page: 1252 year: 2013 end-page: 1258 article-title: Factor endowments, wage growth, and changing food self‐sufficiency: Evidence from country‐Level panel data publication-title: Am. J. Agric. Econ. – volume: 22 start-page: 573 year: 2011 end-page: 584 article-title: The rise of migration and the fall of self employment in rural China's labor market publication-title: Chin. Econ. Rev. – volume: 47 start-page: 737 year: 1999 end-page: 766 article-title: China's food economy to the 21st century: Supply, demand, and trade publication-title: Econ. Dev. Cult. 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Rev. – volume-title: The compiled materials of costs and profits of agricultural products of China year: 1985 ident: e_1_2_8_20_1 contributor: fullname: State Price Bureau – volume-title: China yearbook of rural household survey year: 1985 ident: e_1_2_8_16_1 contributor: fullname: National Statistical Bureau, China (NSBC) – volume-title: China's statistical yearbook year: 2014 ident: e_1_2_8_15_1 contributor: fullname: National Statistical Bureau, China (NSBC) – ident: e_1_2_8_4_1 doi: 10.1080/00220389908422572 – ident: e_1_2_8_13_1 doi: 10.1080/07474930008800481 – ident: e_1_2_8_8_1 doi: 10.1016/0304-3878(95)00065-8 – ident: e_1_2_8_10_1 doi: 10.1016/j.chieco.2011.08.001 – volume: 82 start-page: 34 issue: 1 year: 1992 ident: e_1_2_8_14_1 article-title: Rural reforms and agricultural growth in China publication-title: Am. Econ. 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| Title | Rising wages, mechanization, and the substitution between capital and labor: evidence from small scale farm system in China |
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