Government Policy, Low‐ and High‐Skilled Labour, and Technical Inefficiency in Chinese Agriculture, 1952–2008

ABSTRACT We utilize Chinese provincial data to explore how government policies affected grain production between 1952 and 2008. We adapt the Caselli‐Coleman framework to allow multiple inputs including fertilizer, land and capital as well as skilled and unskilled labour. We also extend the method to allow for comparisons of production possibilities over time as well as across provinces. We derive measures of the technological frontier for Chinese agricultural production for each year over the 56‐year period. The empirical estimates illustrate how labour efficiency in Chinese grain production changed from 1952 to 2008, encompassing the Great Leap Forward (1958–1962), the collective farming period (1963–1977), and the rural economic reforms initiated in 1978. Government policies held back agricultural production in the 1960s and 1970s by limiting efficient use of labour at a time when the Green Revolution was raising grain yields dramatically throughout Asia. Reductions in labour efficiency led to a 12.9% average decline in grain output during the Great Leap Forward and little gain during the collective farming period. In contrast, rural reforms that allowed farmers to profit from production above their assigned quotas starting in 1978 significantly enhanced labour efficiency for the more skilled but had little impact on the productive efficiency of unskilled agricultural workers.