Land Rental Market Participation and Its Impact on Fixed Investment and Household Welfare: Evidence from Chinese Apple Production Sites

Using a large dataset from the specialized apple production sites of China and multiple econometric methods, we identify the main determinants of farmers' land rental decisions and the effects from renting land in on their investment and economic welfare. It is found that having more effective cultivated land before renting in has a significantly negative effect on the land rented in, that households with rich land endowments or large areas of land rented in usually invest more in fixed assets, and that efficient provisions of credit and insurance are helpful to encourage investments in fixed assets. As a result, renting in land generates gains in terms of agricultural income, total income, and productive expenditure.