Farmland property rights （FPRs） are essential institutional constraints on factor allocation and can play an important role in farmers’ investment behavior. Based on the data from 2,704 rural households in 9 provinces, this paper discusses the three production characteristics of food crops, cash crops and rice. Then we examines the casual effect of FPRs and factor allocation on farmers’ investment incentives. Our research focuses on constructing the micro-theoretical model of the household’s factor allocation behavior, and uses the mediating effect model and the propensity score matching method to identify the causal effect of farmers’ investment incentives. The estimation results show that: （1） The effect of FPRs on investment incentives is characterized by the historical dynamic process, the effect of individual differences, and the interaction of various policies. （2） FPRs do not directly affect farmers’ investment decisions, but indirectly stimulate short-term （service outsourcing） and long-term （self-purchasing machinery） investment behavior through the allocation behavior of farmland transfer. （3） The stability of FPRs improves the flexibility of farmers’ allocation of farmland. Farmers who transfer in farmland are more inclined to long-term investment, while farmers who transfer out farmland are more likely to short-term investment. （4） Farmland tilting promotes the long-term investment behavior of rice farmers, and inhibits the short-term investment behavior of rice farmers. Overall, our findings highlight the importance of FPRs on factor allocation and investment incentives. A basic conclusion is that only when FPRs are well-defined can the market play its role in allocating factors of production. To re-examine the multi-objective function of farmers’ heterogeneity and the constraints of factor endowments is the meaning of farmers’ decision-making investment based on price signals and policy orientation.
Farmland Property Rights, Factor Allocation and Farmers’ Investment Incentives: Short-term or Long-term?
Journal of Finance and Economics Vol. 46, Issue 02, pp. 111 - 128 (2020) DOI:10.16538/j.cnki.jfe.2020.02.008
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Cite this article
Hu Wen, Zhang Jinhua, Chen Zhaojiu. Farmland Property Rights, Factor Allocation and Farmers’ Investment Incentives: Short-term or Long-term?[J]. Journal of Finance and Economics, 2020, 46(2): 111-128.
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