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Increasing Wages, Factor Substitution, and Cropping Pattern Changes in China

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  • Zhoufu Yan
  • Shurui Zhang
  • Fangwei Wu
  • Binlei Gong

Abstract

This article analyzed the influence of increasing wages on cropping patterns from theoretical and empirical perspectives. The results showed that the increasing labor cost provided a significant incentive to adjust the grain cropping pattern, which increased the production of the three major cereal grains but reduced the production of other grain crops. Increasing wages had a significant negative impact on cash crops. More labor‐intensive cash crops experienced a larger negative impact in the context of increasing wages. The increase in labor costs also had a negative impact on the proportion of vegetables produced, which was more evident in northern China. A further mechanism test indicated that factor substitution was a significant reason for cropping pattern changes; this illustrated the substitution of labor by machinery not only between grain crops and cash crops but also among different cash crops.

Suggested Citation

  • Zhoufu Yan & Shurui Zhang & Fangwei Wu & Binlei Gong, 2023. "Increasing Wages, Factor Substitution, and Cropping Pattern Changes in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 31(5), pages 190-214, September.
    • Handle: RePEc:bla:chinae:v:31:y:2023:i:5:p:190-214
    DOI: 10.1111/cwe.12506
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