Migration, local off-farm employment, and agricultural production efficiency: evidence from China

This paper studies the effect of local off-farm employment and migration on the technical efficiency of rural households' crop production using a five-year panel dataset from more than 2000 households in five Chinese provinces. While there is not much debate about the positive contribution of migration and local off-farm employment to China's economy, there is increasing concern about the potential negative effects of moving labor away from agriculture on China's future food security. This is a critical issue as maintaining self-sufficiency in grain production will be critical for China to feed its huge population in the future. Several papers have studied the impact of migration on production and have yielded ambiguous results. But the impact of migration on technical efficiency is rarely studied. Methodologically, we incorporate the correlated random-effects approach into the inefficiency analysis of the standard stochastic production frontier model to control for unobservable factors that are correlated with migration and off-farm employment decisions and technical efficiency. The most consistent result that emerged from our econometric analysis is that neither migration nor local off-farm employment has a negative effect on the technical efficiency of grain production, which does not support the widespread notion that vast-scale labor migration could negatively affect China's future food security.