The Influence Mechanism Of The Sloping Land Conversion Program On Rural Household Income

As one of the largest ecological restoration program in developing countries, the SlopingLand Conversion Program (SLCP) has been widely studied for its induced socioeconomic andecological impacts. Among the examined socioeconomic impacts are the structural change ofincome, labor transfer, and liquidity constrains. In this paper, instead of gauging these effectswith separated models, we formulated and estimated the direct and indirect influencepathways of the SLCP on household income. The main research contents are as follows:The first part is the theory and literature review of the socioeconomic effect estimation ofthe SLCP and the production behavior of the rural households. We emphasize that it is ofgreat significance to include labor transfer and liquidity constraint into the influencingmechanism of the SLCP on rural household income based on the current studies the SLCP’seffect on households. Since participating in the SLCP has changed the encouragement to ruralhouseholds, we then focus on the behavior and resource allocation theory of rural householdsespecially in China. And these base the theoretical foundation for our research.The second part analyzes the dynamics of the structural change of household incomeusing data from Shaanxi Statistical Yearbook. And it is found that during1999—2010, ruralhousehold income increase in Shaanxi was mainly attributed to the increase ratio of wageincome in total income, while the percentage of operating income in total income has declined.Even through the percentage of the income from operating in the first industrial sector hasdeclined in total income; it is the main source of operating income.Thus, in the third part, we incorporate a unified analytic framework of the SLCP’s effecton rural household income including the effect of labor transfer and liquidity constraint. Wespecify a Structural Equation Model to test the proposed hypotheses using household surveydata in the year2004,2006,2008and2010in Wuqi County. The results provide valid supportfor our theoretical hypotheses. Participation in the SLCP has had a positive direct incomeeffect on household, but this effect is very small and insignificant with an average level2%during2004-2010. In the meantime, the SLCP has intensified household labor transfer tooff-farm employment, relaxed the liquidity constraint facing with the structural change ofproduction; thus induced positive indirect effects on household income. And it is notable that the magnitudes of the two indirect pathways are much higher than the direct pathway.Therefore, the total effect of the SLCP on household income is positive, and it increased from4%in2004to11%in2010and the contribution the two indirect pathways increased from75%to82%correspondingly.So, the last part is conclusion and discussion. More attention should be given toconsolidating the positive socioeconomic influence mechanism of the SLCP as well as theevaluating and maintaining the ecosystem recovery. And concrete efforts should be proposedto further promote labor transfer and relax liquidity constraint, such as the productionefficiency promoting of households, providing more comprehensive and effectiveemployment or business assistance, and enhancing the information obtaining ability ofhouseholds.