Effects of the sloping land conversion program impact on the rural households’ income and consumption inequalities in China

doi:10.12302/j.issn.1000-2006.202002035

JOURNAL OF NANJING FORESTRY UNIVERSITY ›› 2021, Vol. 45 ›› Issue (1): 227-234.doi: 10.12302/j.issn.1000-2006.202002035

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Effects of the sloping land conversion program impact on the rural households’ income and consumption inequalities in China

LIU Hao¹^,²(), LIU Can², LIU Junchang¹^,^*()

1. School of Economics and Management, Beijing Forestry University, Beijing 100083, China
2. China National Forestry and Grassland Economics and Development Research Center, Beijing 100714, China

Received:2020-02-24 Accepted:2020-10-11 Online:2021-01-30 Published:2021-02-01
Contact: LIU Junchang E-mail:6hao1121@163.com;liujunchang@vip.sina.com

Abstract

Abstract:

【Objective】 In 1999 the Chinese government launched the Sloping Land Conversion Program (SLCP). Two key objectives of the SLCP are ecosystem and improving rural household livelihoods. The SLCP has the largest government financial input and the most rural households enrolled in the world. The central government provides subsidies to rural households, who convert their sloping land to forestland. Because the eligibility of rural households to participate and their capacity for production following participation varies, it is not known whether different rural households are equally involved in this program. This is an important policy issue to clarify. The existing literature focuses on the impact of the SLCP on the income inequality of rural households. Owing to the lack of further decomposition on the impact of the SLCP and its pathways, existing research cannot answer how the SLCP impacts the income inequality of rural households, and few studies focus on the impact of the SLCP on consumption inequality in rural households. 【Method】 Through eight consecutive surveys, we established a unique panel database of 952 rural households in 15 counties in six provinces covering north, east, south, southwest and northwest China from 1995 to 2016. Using this database and a recursive equations model, this study estimated the impact of the SLCP on the income and consumption of rural households, and measured the contribution of the SLCP to income and consumption inequality in the sample households. The academic contributions of this study are as follows: it is probably the first to estimate the impact of the SLCP on consumption inequality of rural households, which accurately reflects the real livelihood differences between rural households. Based on the framework of the persistent income hypothesis and the full consideration of the impact of psychological accounts on consumption behavior, we also decomposed the impact of the SLCP on rural household income and consumption inequality. We discovered the key impact pathway by which the SLCP affects the income and consumption inequality in rural households. 【Result】 The SLCP increased the land-based permanent income, and off-farm permanent and transitory income of households, but decreased the land-based transitory income. The SLCP increased the income and consumption inequality of rural households by changing their land-based and off-farm permanent income and transitory income. The consumption smoothing mechanism and the law of marginal propensity to consume decreased, making the impact of the SLCP on income inequality higher than that on the consumption inequality. The contribution rate of the SLCP to the income Gini coefficient gradually increased from 0.10% in 1999 to 1.45% in 2003. After 2003, the contribution rate gradually decreased, and the contribution rate in 2016 was 0.98%. The contribution rate of the SLCP to the consumption Gini coefficient gradually increased from 0.06% in 1999 to 1.09% in 2007. After 2007, the contribution rate gradually decreased, and the contribution rate in 2016 was 0.86%. The impact of the SLCP on land-based and off-farm permanent incomes extended the income inequality of rural households, and the impact of the SLCP on land-based transitory income narrowed their income disparity. The contribution rate of the land-based transitory income changed from the SLCP to the income Gini remained around -0.9% since 2007. The impact of the SLCP on income inequality partially transmitted to the inequality in consumption, and the impact of the SLCP on land-based permanent income is the key source of growth in consumption inequality. Owing to the low marginal propensity to consume, the impact of transitory income changed from the SLCP on income inequality has little effect on consumption inequality. Because of the different policies of the SLCP and different social and economic development levels, the SLCP in the Yangtze River Basin narrowed the income inequality of rural households by 0.85%-0.95% since 2007 and has had almost no impact on the consumption inequality in the sample rural households. In the Yellow River Basin, the SLCP widened the income and consumption inequality in the sample rural households. 【Conclusion】 Overall, the SLCP increased the income and consumption of rural households. At the same time, the SLCP widened the income and consumption inequality of rural households. In the Yangtze River Basin and the Yellow River Basin, the impact of the SLCP on the income and consumption inequality in sample rural household was different. Therefore, when designing new policy, government attention should be focused on the impact of inequality and its pathway in rural households. To account for differences in regional impacts, the policies of the SLCP should be adjusted to promote income and consumption equality appropriately.

Key words: sloping land conversion program (SLCP), income inequality, consumption inequality, permanent income hypothesis

CLC Number:

F326
S725

LIU Hao, LIU Can, LIU Junchang. Effects of the sloping land conversion program impact on the rural households’ income and consumption inequalities in China[J]. JOURNAL OF NANJING FORESTRY UNIVERSITY, 2021, 45(1): 227-234.

Figures/Tables 5

Fig.1

Table 1

Table 2

Table 3

Table 4

Contributions of the SLCP to income and consumption inequalities"

年度 year	收入基尼系数 income GINI G_R	所有样本/% all samples				长江流域/% Yangtze River Basin				黄河流域/% Yellow River Basin
年度 year	收入基尼系数 income GINI G_R	$W R 3$	$W R 4$	$W R 5$	$W R 6$	$W R 3$	$W R 4$	$W R 5$	$W R 6$	$W R 3$	$W R 4$	$W R 5$	$W R 6$
1999	0.36	0.12	-0.09	0.05	0.02	0.03	-0.05	0.02	0.00	0.69	0.27	0.12	0.06
2003	0.35	1.10	-0.51	0.72	0.14	0.26	-0.77	0.29	0.06	3.15	0.62	1.44	0.17
2007	0.36	1.19	-0.99	0.59	0.59	0.24	-1.56	0.21	0.24	3.70	1.15	1.56	1.11
2011	0.40	1.05	-1.13	0.62	0.57	0.23	-1.59	0.24	0.20	3.26	0.71	1.45	1.07
2016	0.43	0.96	-0.99	0.65	0.36	0.18	-1.47	0.29	0.15	3.05	0.50	1.34	0.83
年度 year	消费基尼系数 consumption GINI G_C	所有样本/% all samples				长江流域/% Yangtze River Basin				黄河流域/% Yellow River Basin
年度 year	消费基尼系数 consumption GINI G_C	$W C 3$	$W C 4$	$W C 5$	$W C 6$	$W C 3$	$W C 4$	$W C 5$	$W C 6$	$W C 3$	$W C 4$	$W C 5$	$W C 6$
1999	0.31	0.06	-0.01	0.01	0.00	0.02	-0.02	0.01	0.00	-0.07	0.00	-0.01	0.00
2003	0.31	0.75	-0.08	0.11	0.03	0.13	-0.16	0.04	0.02	1.98	0.05	0.25	0.06
2007	0.31	1.01	-0.11	0.15	0.04	0.18	-0.23	0.06	0.03	3.05	0.05	0.26	0.06
2011	0.33	0.86	-0.10	0.13	0.03	0.13	-0.16	0.04	0.02	2.84	0.07	0.33	0.09
2016	0.33	0.80	-0.09	0.12	0.03	0.13	-0.16	0.04	0.02	2.50	0.06	0.31	0.08

Table 4

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项目 item	变量 variables	定义definition
退耕还林工程SLCP	S	参加退耕(是=1;否=0)participate in the SLCP (yes=1; otherwise=0)
生产要素投入 production factors input	P₁	耕地面积(hm²)area of cropland
	P₂	林地面积(hm²)area of forest land
	P₃	以土地为基础的劳动力投入(人·d)land-based labor input
	P₄	以土地为基础的生产费用(元)land-based production expenditure
	P₅	非农劳动力投入(人·d)off-farm labor input
收入income	R₁	以土地为基础的收入(元)land-based income
收入income	R₂	非农收入(元)off-farm income
消费consumption	C	消费(元)total consumption
市场因素 market factors	M₁	农产品价格指数(1995年为1)price index of agricultural products (which in 1995 is 1)
	M₂	林产品价格指数(1995年为1)price index of forest products (which in 1995 is 1)
	M₃	劳动力价格指数(1995年为1)price index of employing labor (which in 1995 is 1)
	M₄	银行1年期存款基准利率(%)interest rate of bank’s 1-year deposits
其他政策 other policies	O₁	种植业税费(补贴视为负项税)(元)tax-fee of agricultural production
其他政策 other policies	O₂	林业税费(补贴视为负项税)(元)tax-fee of forestry production
家庭特征 family characteristics	F₁	家庭人口(人)household size
	F₂	户主年龄(岁)age of the household head
	F₃	户主受教育年限(a)education year of the household head
	F₄	户主是干部(是=1;否=0)whether the household head is a cadre (yes=1; otherwise=0)
村庄特征 village characteristics	V₁	村庄到县城的距离(km)distance from village to county
	V₂	村庄道路状况(硬化=1;否则=0)road conditions (hard surface=1; otherwise=0)
	V₃	村级平均消费支出(元)average consumption expenditure of the village

变量 variables	所有样本 all samples	较低收入 lower level	中等收入 middle level	较高收入 higher level
R₃	0.34^***(0.01)	0.39^***(0.01)	0.29^***(0.01)	0.26^***(0.01)
R₄	0.01^***(0.00)	0.02^***(0.00)	0.01^***(0.00)	0.01^***(0.00)
R₅	0.14^***(0.01)	0.16^***(0.02)	0.05^**(0.02)	0.06^***(0.02)
R₆	0.02^***(0.00)	0.02^***(0.00)	0.01(0.01)	0.01^*(0.00)

年度 year	所有样本 all samples				长江流域 Yangtze River Basin				黄河流域 Yellow River Basin
年度 year	ΔR₃	ΔR₄	ΔR₅	ΔR₆	ΔR₃	ΔR₄	ΔR₅	ΔR₆	ΔR₃	ΔR₄	ΔR₅	ΔR₆
1999	12.17	-4.54	1.37	0.34	2.16	-3.04	0.52	0.07	41.23	6.50	2.95	1.47
2003	93.81	-21.72	26.30	3.84	21.00	-39.65	11.14	1.81	216.19	12.97	42.44	4.18
2007	136.23	-40.05	48.55	13.98	27.69	-61.95	18.88	5.22	379.42	32.00	97.74	30.99
2011	146.13	-38.21	81.05	19.11	30.19	-59.66	28.29	7.62	395.58	30.12	200.38	36.74
2016	185.77	-35.52	135.96	21.36	35.34	-54.29	51.99	9.21	573.72	28.84	283.94	33.12
年度 year	所有样本 all samples				长江流域 Yangtze River Basin				黄河流域 Yellow River Basin
年度 year	ΔC₃	ΔC₄	ΔC₅	ΔC₆	ΔC₃	ΔC₄	ΔC₅	ΔC₆	ΔC₃	ΔC₄	ΔC₅	ΔC₆
1999	4.18	-0.44	0.63	0.16	0.64	-0.81	0.21	0.10	11.98	0.28	1.50	0.37
2003	35.98	-3.81	5.39	1.35	6.23	-7.82	2.07	0.92	81.44	1.90	10.17	2.54
2007	66.81	-7.08	10.02	2.50	10.82	-13.58	3.60	1.60	174.79	4.09	21.83	5.45
2011	92.27	-9.78	13.83	3.46	13.74	-17.24	4.57	2.03	279.35	6.53	34.89	8.71
2016	115.12	-12.20	17.26	4.31	18.87	-23.69	6.28	2.79	294.14	6.87	36.74	9.17

Effects of the sloping land conversion program impact on the rural households’ income and consumption inequalities in China

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