Household Heads, Non-Economic Factors and Grain Production in China in the 1990s

The omission of relevant independent variables in the estimation of agricultural production functions gives rise to mis-specification and biased estimators. Using disaggregated household survey data, this study finds that official positions and education of household heads are important determinant of grain output in rural China and should be incorporated into the production functions. The impact of non-economic factors on grain output is caused mainly by the imperfections in the market for farm inputs and collective ownership of large productive assets for farm production. Policy implications are drawn for further reforms in China's grain markets and rural administration system.