1. Introduction
As a new emerging economy with a large population to feed, how to improve agricultural productivity has always been a key point for food security and social stability in China. It had been a top priority to provide people with adequate food and clothing in the early stage of China’s industrialization and urbanization. This demand has been continually upgraded with the rapid socioeconomic development of the country after its market liberalization. The market reform brings farmers not only more access to production goods, but also additional job opportunities in the other industries. Meanwhile, the development in science and technology releases a great amount of the agricultural labor force and boosts productivity. It is commonly accepted that the Total Factor Productivity (TFP) is contributed as a main incentive to the growth of agricultural output in China. Even though its agricultural input stagnated during the 1990s, agricultural output kept increasing with a respectable annual growth of TFP around 2% (Fan, 1997 [
1]). Cao and Birchenall (2013) [
2,
3] further conclude that the agricultural labor input has been decreasing at an annual rate of 5%, and agricultural TFP has been growing by 6.5% in the past few decades. Wang et al., (2013) [
4] observe a tendency of increasing regional disparity given that the coastal regions hold faster growth rates of agricultural TFP. There is no doubt that the increase of agricultural productivity facilitates the labor surplus moving to other sectors, but the growing liquidity of the agricultural labor force constrains the growth of agricultural productivity conversely (Rozelle, 1999 [
5]). The agricultural productivity gap across countries has been investigated in rich detail in the study of Gollin et al., (2002) [
6]. Gollin et al., (2014 [
7,
8]) further examine the cross-country agricultural productivity gap in their recent studies. They conclude the existence of a cross-country agricultural productivity gap. They investigate the extent of the gap in terms of agricultural labor productivity by taking the measures of sector inputs and outputs into consideration (2014 [
7]) and confirm the existence of large productivity differences in the agricultural sector by micro and macro data on productivity in various grain products. It is commonly accepted that the agricultural labor productivity increases in China along with its socioeconomic development. However, how this growth path is characterized still remains unclear, given the complex interactions of labor and productivity in agriculture. Statistics show that the nominal output and input of China’s agriculture kept increasing during the recent decades. However, it is hard to capture this tendency in terms of the real values, since the index of agricultural input and output fluctuates dramatically (see
Appendix A). This paradox blurs the real growth path of agricultural productivity, especially the agricultural labor productivity, considering the high fluidity of the labor resource from agriculture to industry in China during the recent years.
When it comes to the growth pattern of the Chinese economy during the last decade, we cannot ignore the lash of the global economic crisis in any terms. To cope with the crisis, the Chinese government launched an investment project “4-Trillion-Yuan Stimulus Package” ($586 billion) in 2008–2009. The distribution of this stimulus package is as follows: the investments to housing guarantees are 0.4 trillion RMB, to rural construction are 37 million RMB, to energy conservation and emissions reduction are 21 million RMB, to infrastructure development are 1.5 trillion RMB, to social services are 15 million RMB, to industrial restructuring are 37 million RMB and to post-disaster reconstruction of Wenchuan are one trillion RMB (World Bank, 2010 [
9]). The Chinese government intended to expand domestic demand and improve people’s livelihood through this stimulus project. This stimulus has been published along with doubts and queries from the very beginning. Some economists stated that this government move would sabotage the Chinese economic structure in the long run and mislead the economy. Hence, how agricultural labor productivity grows under this complex macro environment could be an interesting perspective to evaluate this stimulus package.
It is hard to depict the development of agricultural labor productivity in China without paving the agricultural policy background. The series of reforms can definitely be attributed as a significant factor to promote agricultural labor productivity. Taking the Household Responsibility System (HRS) for instance, this reform greatly pumps up the pulse of farmers’ productivity and, hence, stimulates agriculture production in the whole of China. This positive effect of HRS has been quantified to initiate an annual growth rate of 5%–10% in farm output and productivity at the initial stage during 1978 and 1985 (Lin, 1992 [
10]). However, the Chinese government gave more priorities to urban construction and industry development during the 1980s and 1990s. This policy preference brought large-scale land expropriation, city expansion and labor migration and, hence, jeopardized the agricultural production and further aggravated urban-rural disparity. To balance the inequality and deal with the great challenges brought up by entering the WTO, a series of new agriculture-oriented policies centered on the reforms of agricultural tax and grain subsidy had been initiated to protect agricultural production since 2000. The central government implemented the regulation of direct grain subsidy at the national level in 2004. This year is also the starting year to reduce the agricultural taxes. Many research works focused on the conversion of the governmental role from an agricultural taxer to a subsidizer and the following changes along with this conversion (Huang et al., 2004 [
11]; Gale et al., 2005 [
12]; Huang et al., 2011 [
13]; Jin et al., 2010 [
14]). The tax abolition came out as an effective reform in increasing rural income and agricultural production via the boost of fixed-capital input, rather than labor input and the improvement of labor productivity instead of capital efficiency, and the gradual reduction of the agricultural tax rate launched initially promoted agricultural productivity as the positive effects of governmental supports to farmers’ incentives in agricultural production. The direct subsidy also increased rural income and had no distortions on producer decisions, so it was not in contrast to the WTO green-box policy (Huang et al., 2011 [
13]). The implications of those reforms were more symbolic, and their effects on rural income and grain production were marginal, contributing 2%–4% of the value of agricultural production
1 (Gale et al., 2005 [
12]). However, the direct grain subsidy has been questioned in the last few years. For instance, The Economist once questioned the government intervention in farming in China. The article claims the subsidy as the “wrong direction” and suggests to introduce the market mechanism into agricultural (The Economist, 2015 [
15]). The Chinese government started to make adjustments to the scheme of the direct subsidy in 2015, aiming to protect the farmland productivity and keep the grain production at an appropriate scale.
Understanding the dynamic trajectory of agricultural labor productivity has been of long-time interest for researchers and policy makers. In order to understand how agricultural labor productivity develops under the influences of such intricate exogenous factors, this study uses the Latent Growth Curve Model (LGCM) and convergence estimation to depict the growth trajectory of agricultural labor productivity at the prefectural level. It also conducts some further analysis on mapping the regional performances in terms of the agricultural labor productivity. This is the first time the LGCM has been used to estimate China’s growth pattern of agricultural labor productivity at the prefectural level. The results contribute to the current knowledge. The paper is structured as follows:
Section 2 will describe the data and methodology; the results of the LGCM will be presented and discussed in
Section 3 and
Section 4, respectively; and
Section 5 will conclude.
5. Conclusions
Our study firstly demonstrated that the Chinese agricultural labor productivity developed certainly as an increasing but non-linear trajectory. The quadratic and cubic curves might better describe the growing trend than the linear one, but still are not precise enough to fit the exact developing path of agricultural labor productivity in China. The piecewise model provided the best fitted trajectory to depict the development of agricultural labor productivity in China among all of the tested models. It breaks the entire trend into three linear pieces with two time points of 2004 and 2008. One breaking point at the year 2004 is the time when the agricultural tax and subsidy reforms had been introduced in the whole country. The other breaking point at the year 2008 is the first year to launch the 4-trillion RMB stimulus package to deal with the global recession. Meanwhile, the labor migration has fluctuated heavily in both years. Even though in the current study, we cannot quantify the direct correlation between the exogenous factors and growth in agricultural labor productivity, it is still empirically reasonable to analyze the potential effects of the agricultural reforms and labor migration on the promotion of agricultural labor productivity. This study can be a side view to confirm that the macro policies play important roles in the promotion of productivity in China besides the development of science and technology.
According to the previous analysis on the individual differences of growth paths, we could conclude that the changing trajectories of the agricultural labor productivity of the prefectural cities in China were following different paths. They started at different initial levels of agricultural labor productivity and also grew at different rates over time. To elaborate more specifically, the prefectures with lower efficiency in agricultural labor productivity have been growing at a relatively lower rate, while the ones with higher productivity were growing faster. The applications of the unspecified model and the piecewise model both confirmed this conclusion. It seemed that the Chinese regions are forming into two clubs in terms of agricultural labor productivity. Each club grows at its own pace and gets more disparate from the other, whereas there might be a convergence trend inside each group. The further analysis of the convergence estimation echoes the conclusions. The absence of σ-convergence indicates the enlarging gap of agricultural labor productivity across Chinese prefectures. The weak β-convergence implies that there might be some observations converging to the higher level; however, they cannot reverse the whole dispersion of agricultural labor productivity across different regions.
Moreover, the piecewise model shows that the disparity of agricultural labor productivity has been further enlarged after 2004 and 2008. In the first stage from 2000–2004, the growth trends of Chinese prefectures are relatively less dispersed even with different growth rates. In the second and third phases (2005–2008 and 2009–2013), there is no convergence in terms of agricultural labor productivity across Chinese regions, hence the distribution of regional agricultural labor productivity becomes more diverged compared to the previous stage. We can assume that the reform in 2004 has effectively promoted the growth of agricultural labor productivity, especially for the developed regions in the early stage, or in other words, the prefectures with better initial conditions of agricultural labor productivity obtained more benefits from the agricultural reforms. As far as we are concerned, the main reason might be that the developed regions normally possessed better circumstances and supporting facilities to implement the reforms more efficiently. Another possible reason might be the experimental reform before 2004 in some pilot regions with favorable agricultural conditions that provided advanced chances for them to make profits from the reforms. Meanwhile, it is also noteworthy to prevent aggressive government intervention in farming and to introduce the market mechanism into agricultural production. The 2008 stimulus package, however, has little effect on closing the regional gap in terms of agricultural productivity. Therefore, it is suggested to the local government and policy makers to attach more importance to the underdeveloped regions. However, blindly expanding the investment is not a wise choice to bridge the gap between the underdeveloped and developed regions. The key is to tailor different policies and investment bundles according to different local conditions and then to improve the macro circumstances for policy implementation. For instance, in the undeveloped regions with slow growth rates in agricultural labor productivity, the critical problem is to enhance the rural infrastructure construction and agricultural technology at the same time. In the developed regions that with fast growth rates in agricultural labor productivity, the supplements for environmental protection and sustainable development in agricultural production shall be given more consideration; further related regulations shall be formulated to improve the existing agricultural subsidy system. In the main grain area, the EU’s regime of green box agriculture to disintegrate subsidy from production can be taken as a reference to prevent production surplus.