Effect of labor opportunity cost on hog production fluctuation: an empirical study based on China

Abstract

To reveal the mechanism and path of the rising labor opportunity cost vis-à-vis the stable production of hogs, this study, based on provincial panel data in China, uses the Hodrick–Prescott filter method to measure the fluctuation rate of hog production and empirically estimates the impact of rural residents’ wage income on the fluctuation of hog production using the fixed effects model. The findings show that, first, rising labor opportunity costs have a stabilizing effect on hog production, for every 1 unit increase in rural residents’ wage income, the fluctuation rate of hog production will decrease by 6.00%. Second, rising labor opportunity costs mainly slow down the fluctuation of hog production by promoting scale operation and agricultural technology advancement, while scale operation and agricultural technology advancement have synergistic effects, and the synergy of the two strengthens the stabilizing effect of rising labor opportunity costs on hog production. Third, the stabilizing effect of rising labor opportunity costs on hog production fluctuation is stronger in key development and export areas. Overall, this study not only helps stabilize the market supply of hogs but also provides meaningful references for governmental departments to formulate agricultural production policies.

Keywords

• Labor opportunity cost
• wage income
• hog production fluctuation
• scale operation
• agricultural technology progress
• Economics