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Does a higher minimum wage accelerate labour division in agricultural production? Evidence from the main rice-planting area in China

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  • Guo, Lili
  • Duan, Xiaoyu
  • Li, Houjian
  • Yang, Wanjiang
  • Ren, Yanjun
  • Guo, Yangli

Abstract

Agricultural production outsourcing, a new means of agricultural production, can optimise the allocation of resources, reduce agricultural production costs, and improve agricultural productivity. However, farmers' outsourcing behaviours are strongly interfered with by many factors such as economics, technology and institutions. Using a farmer-level data set from 2014 to 2018 in China, we examine the effects of the minimum wage increase on rice farmers' production outsourcing behaviours. Our study relies on a Logit regression framework and uses the control function (C.F.) approach to address potential endogeneity concerns. Results show that the minimum wage increase significantly reduces the probability of farmers conducting production outsourcing. We also examine the heterogeneous effects of the minimum wage increase, and find that compared with other outsourcing services, the adverse effects on harvesting outsourcing are the strongest; the negative effects on production outsourcing are stronger for rice farmers with higher education. Our results provide new insights into understanding how labour regulation affects labour division in agricultural production.

Suggested Citation

  • Guo, Lili & Duan, Xiaoyu & Li, Houjian & Yang, Wanjiang & Ren, Yanjun & Guo, Yangli, 2022. "Does a higher minimum wage accelerate labour division in agricultural production? Evidence from the main rice-planting area in China," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 35(1), pages 2984-3010.
    • Handle: RePEc:zbw:espost:262399
    DOI: 10.1080/1331677X.2021.1985573
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    References listed on IDEAS

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    2. Bhaskar, V & To, Ted, 1999. "Minimum Wages for Ronald McDonald Monopsonies: A Theory of Monopsonistic Competition," Economic Journal, Royal Economic Society, vol. 109(455), pages 190-203, April.
    3. T Vernimmen & W Verbeke & G van Huylenbroeck, 2000. "Transaction cost analysis of outsourcing farm administration by Belgian farmers," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 27(3), pages 325-345, September.
    4. Jeffrey M. Wooldridge, 2015. "Control Function Methods in Applied Econometrics," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 420-445.
    5. Wenkai Sun & Xianghong Wang & Xiaoxi Zhang, 2015. "Minimum wage effects on employment and working time of Chinese workers——evidence based on CHNS," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-22, December.
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    Cited by:

    1. Zhang, Cheng & Nie, Kunxi & Zhu, Yueji, 2024. "Participation in land rental and labor markets and agricultural economic performance of banana farmers in China," Land Use Policy, Elsevier, vol. 146(C).

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    More about this item

    Keywords

    production outsourcing; minimum wage; control function (C.F.) approach; China;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D2 - Microeconomics - - Production and Organizations
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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