Heterogeneous Effects of Farm and Nonfarm Income on Household Consumption Expenditure and Inequality

Wanglin Ma; Hongyun Zheng; Puneet Vatsa

doi:10.1111/rode.70059

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Heterogeneous Effects of Farm and Nonfarm Income on Household Consumption Expenditure and Inequality

Journal article

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Heterogeneous Effects of Farm and Nonfarm Income on Household Consumption Expenditure and Inequality

Wanglin Ma, Hongyun Zheng and Puneet Vatsa

Review of Development Economics, Vol.30(2), pp.1333-1344

2026

DOI: https://doi.org/10.1111/rode.70059

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Abstract

categories

consumption expenditure

farm income

inequality

nonfarm income

rural China

This study examines the heterogeneous effects of farm income and nonfarm income on household consumption expenditure and consumption expenditure inequality, using data from the 2016 China Labor Force Dynamics Survey. A two‐stage residual inclusion model is employed to address the endogeneity of nonfarm income. Results show that nonfarm income plays a larger role in raising household consumption expenditure than farm income. Specifically, an increase of 1000 yuan in farm and nonfarm income raises household consumption expenditures by 134 and 215 yuan/capita, respectively. Furthermore, nonfarm income is associated with consumption expenditure inequality, while farm income is not. Disaggregated analyses show that nonfarm income has larger effects than farm income on expenditures on food, consumer goods, and transportation; the reverse is true for medical care and gift expenditures. These findings suggest that policies promoting nonfarm employment and supporting farm income growth can help improve rural household consumption while addressing consumption inequality.

Details

Title: Heterogeneous Effects of Farm and Nonfarm Income on Household Consumption Expenditure and Inequality
Authors: Wanglin Ma (Corresponding Author) - Lincoln University
Hongyun Zheng - Huazhong Agricultural University
Puneet Vatsa - Lincoln University
Publication details: Review of Development Economics, Vol.30(2), pp.1333-1344
Publisher: Wiley-Blackwell Publishing Ltd.
Date published: 2026
DOI: 10.1111/rode.70059
ISSN: 1467-9361
Copyright note: © 2025 The Author(s). Review of Development Economics published by John Wiley & Sons Ltd. This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
Data Availability: The data that support the findings of this study are available from the corresponding author upon reasonable request.
Grant note: National Natural Science Foundation of China. Grant Numbers: 72303076, 72203066
Organisation Unit: School of Business and Creative Industries
Language: English
Record Identifier: 991164844202621
Output Type: Journal article

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