Who is affected: Influence of agricultural land on occupational choices of peasants in China

Abstract The effect of agricultural land on labour allocation between agricultural and non-agricultural sectors has profound policy implications for industrialization and urbanization. Using micro data from a nationally representative survey in China, this study attempts to examine how agricultural land affects rural people’s propensity to leave the farming sector and who is affected. We find that generally, land decreases the probability of taking a non-farming job and has a lock-in effect on rural labour. More interestingly, this effect exists among the middle-aged people (36–55 years old) and not among young people. A mechanism analysis shows that income from agricultural production explains part but not all of the land lock-in effect. Heterogeneity analyses from the perspectives of individual risk preference and village-level planting structure show that the land lock-in effect broadly exists. Finally, we use the IV method to address the potential endogeneity problem, and the main results are verified. We believe that the heterogeneity of the land lock-in effect between different age cohorts has important policy implications.