Agricultural commercialization and productivity: Evidence from land market participation in rural China

This study utilizes nationally representative panel data on rural Chinese households to investigate the interrelationship between smallholders’ participation in land rental markets and their agricultural commercialization while also evaluating the interactive effects of these market‐oriented farming practices on agricultural land and labor productivity. We adopted a bivariate Tobit model, fixed effects models, and instrumental variable methods to address the endogeneity problems. Results reveal a mutually reinforcing relationship between farm households’ land rental area and commercialization decisions. Furthermore, renting farmland is associated with improved agricultural labor productivity and reduced land productivity. Agricultural commercialization shows a positive correlation with the productivity of both land and labor for farm households. Finally, commercialization could positively moderate the association between land renting and agricultural productivity. Policymakers should design policies and strategies to promote the development of the land rental market and the commercialization of farmers, which could improve labor and land productivity.