Valuing the effect of Capital goes to countryside on cropland abandonment: Evidence from rural China

Abstract

Capital goes to countryside (CGTC) promotes the upgrading of rural industries, but has the possibility of exacerbating the cropland abandonment by farmers, which in turn affects food security. However, the effect and its mechanisms between CGTC and cropland abandonment are not clear. We use the three-year unbalanced panel data on 16,634 rural households in 27 Chinese provinces to empirically analyze the relationship between CGTC and cropland abandonment. The result shows that the CGTC can reduce cropland abandonment by 10.1%. Specifically, the capital engages in agricultural production(CEAP), capital engages in agricultural productive services(CEAPS), and capital engages in industry and commerce(CEIC) can significantly curb cropland abandonment by 5.8%, 10.0%, and 6.3%, respectively. These impact mechanisms are realized by promoting agricultural land transferred out, enhancing agricultural mechanization, and increasing part-time employment in rural household. Additionally, the CGTC's inhibition effects on cropland abandonment are more addressed in the region characterized by major food-producing region, plain-type, better collective supervision, and household of higher agricultural income share. These findings provide novel path for policymakers to utilize cultivated land efficiently and ensure food security by attracting various CGTC.