A Double-Edged Sword: Farmland Transfer and Productivity Gaps Among Farmers with Diverse Livelihood Capital

The modernization of agriculture within developing nations represents a complex challenge at the intersection of social and economic systems. Enhancing agricultural labor productivity (ALP) is the key to increasing farmers’ incomes and promoting rural economic development in low- and middle-income countries. To reveal the deep-seated factors that restrict the improvement of ALP, this study, based on the internal and external development constraints of farmers, uses the 2020 data from the China Family Panel Studies (CFPS) database. It systematically analyzes the effects and internal logic of farmers’ livelihood capital and farmland transfer on ALP, employing both an endogenous switching regression model and a generalized structural equation model. The findings of this study are as follows: (1) Physical capital, financial capital and social capital can significantly increase the probability of farmers participating in the farmland transfer and transfer-in. Moreover, physical capital can significantly reduce the probability of farmers participating in the farmland transfer-out. (2) Physical capital is significantly and positively correlated with the ALP of both farmland transfer farmers and non-transfer farmers. Financial capital has a significant positive correlation with the ALP of transfer-in farmers. Social capital is significantly positively correlated with the ALP of non-transfer farmers. (3) Farmland transfer can significantly improve ALP, and the productivity-enhancing effect of farmland transferring-in is considerably more pronounced than that of transferring-out. (4) Mediation analysis reveals that physical and social capital enhance ALP by promoting farmer participation in the farmland transfer market. When classified by different transfer behaviors, physical capital enhances ALP by promoting both the transferring-in and transferring-out of land. Financial capital and social capital can promote farmers’ transfer-in of land to enhance ALP. (5) The heterogeneity analysis shows that, compared with the other two types of farmers, farmland transfer has the most significant effect on improving the ALP of livelihood capital-abundant farmers, while farmland transfer-in has the greatest efficiency improvement effect for capital-deficient farmers, and farmland transfer-out has the greatest efficiency improvement effect for capital-balanced farmers. By providing a detailed, evidence-based model of these complex interactions, this research contributes to the broader understanding of change management and innovation in the pursuit of sustainable and equitable rural futures.