The agriculture productivity puzzle: Capital deepening and agricultural productivity in China

Abstract

This study investigates how capital deepening influences agricultural productivity among peasant households in China, considering heterogeneity across household types and regions. Using data from the China Family Panel Survey, we find that land size is negatively associated with land productivity but positively affects labour productivity, suggesting persistent land misallocation in China. Technological capital significantly improves both productivity measures across regions, while social capital has a consistent but modest positive effect. Information capital enhances productivity primarily among wage-income households and those in the western region, indicating critical information asymmetries. These findings highlight the need for targeted policy interventions to optimize farm scale, reform land tenure, and foster rural talent development. In particular, technological investment and extension services are crucial for improving productivity. This study deepens our understanding of productivity dynamics among Chinese peasant households and provides evidence-based insights to inform policies aimed at fostering inclusive agricultural modernization.