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Sustainability 2017, 9(10), 1885; doi:10.3390/su9101885

Institutional Regime, Off-Farm Employment, and the Interaction Effect: What are the Determinants of Households’ Forestland Transfer in China?

1
College of Economics and Management, Northwest A&F University, No. 3 Taicheng Road, Yangling 712100, China
2
Department of Forest Sciences, University of Helsinki, P.O. Box 27, 00014 Helsinki, Finland
3
Research Institute of Forestry Policy and Information, Chinese Academy of Forestry, No. 1, Dongxiaofu, Xiangshan Road, Beijing 100091, China
4
College of Economics and Management, Jiangxi Agricultural University, Nanchang 330045, China
5
Economic Development Research Center, State Forestry Administration of China, No. 18 Hepingli East Street, Beijing 100714, China
*
Authors to whom correspondence should be addressed.
Received: 14 September 2017 / Revised: 16 October 2017 / Accepted: 18 October 2017 / Published: 19 October 2017
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Abstract

The development of the land rental market has been widely attributed to the associated institutional regime and the functioning of the off-farm labor market. However, little is known of the interaction effect of these two factors. To fill this gap, we employ a nationwide representative household dataset to investigate the effects of China’s collective forest tenure reform (CFTR) and off-farm employment on forestland transfer in China. Special interest is focused on their potential interaction effect. The Smith-Blundell instrumental variable tobit model is adopted to account for the endogeneity of off-farm employment. The estimation results show that both the tenure reform and off-farm employment significantly influence forestland transactions. However, compared to the positive effect of the reform on both renting in and renting out forestland, the effect of off-farm employment is mixed, that is, its effect is negative when forestland is rented in but positive on rent-out decisions. An important finding is that the CFTR imposes a negative enhancement effect on forestland rent-in through its interaction term with off-farm employment. In contrast, the enhancement effect on rent-out is not statistically significant, which may be due to the neutralization by the endowment effect of the CFTR. View Full-Text
Keywords: collective forest tenure reform; China’s forestland transfer; off-farm employment; interaction effect; endogeneity; instrumental variable tobit collective forest tenure reform; China’s forestland transfer; off-farm employment; interaction effect; endogeneity; instrumental variable tobit
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Zhang, H.; Kuuluvainen, J.; Ning, Y.; Liao, W.; Liu, C. Institutional Regime, Off-Farm Employment, and the Interaction Effect: What are the Determinants of Households’ Forestland Transfer in China? Sustainability 2017, 9, 1885.

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