Zhejiang Province, Farmers' Income Diversification And Its Impact Factors In Empirical Research

The high increases of farmer income and its diversification tendence in the province of Zhejiang in the past years have received more attention from the academic circle. It is of theoretical and practical significance to study the income diversification and its determinant factors in this province.The objective of this paper is to analyze the diversification of farmer income in Zhejiang and explore its main factors since in the past twenty years. In the first part of this paper, the theoretical importance of agricultural policy and macroeconomic changes for farmer income hi China has been discussed, which includes agricultural market and structural policy, rural employment policy, farmland policy, household registration system, farm credit policy and cropping rotation system. The discussion about macroeconomic circumstances concentrates primarily on the rapid growth of rural industrialization in the province of Zhejiang.Using the panel data for 1986 to 1991 and 1995 to 2000 which are based on the fixed investigations for total over 9900 farming households by the provincial government in the ten different villages in Zhejiang, the Binary Multi-variate Logistic Model is used to explain the the diversification of farmer income. To compare the possible difference of the estimatied models by OLS and TSLS, the models have been constructed on the basis of total and net income. Moreover, the logistic regressions are specially estimated for the total sample and the four different regions included the plain, hill, mountainous and piscatorial areas, in order to consider the regional difference in natural und economic condition in this province. The results of the estimated models have showed that the share of farmer's labor in crop and agricultural production, the total cultivated area and the major household's business activities have made a great contribution to the income diversification in the all four regions in Zhejiang. But in the plain and hill areas, the multi-cropping index and the net income per capita effect significantly on the diversification. In the mountainous areas, the level of multi-cropping index is only the main factor for the income diversification. In the piscatorial areas, farmer income showed to be somewhat singular, especially during the period from 1995 to 2000. Based on the above analysis, it can be concluded that within agriculture, more labors use in crop production, less cultivated areas for grain crops, and thus diversifying agricultural production und farmland, will contribute to increase farm income. In non-agricultural sectors, the share of farmer's labor determines the level of net income per capita and its diversification.According to the empirical results above, the following suggestions are made for further increasing farmer income: (1) reform the existing rural household registration and thus promote rural urbanization to the break down the non-economic limitations for farmer employment; (2) promote the competitiveness of TVE by institutional and technological innovations to increase the non-agricultural income; (3) deepen the rural educational system reform and increase the human capital input to enchance the educational quality of farmers. (4) expand the public inputs in agricultural and rural infrastructure to stabilise the farming income; (5) build an efficient land transfer system to increase the efficience of farm size; (6) adjust the agricultural production structure to improve the farming efficience.