Asset endowments, non-farm participation and local separability in remote rural China

Purpose – The aim of this paper is to address a local separability character partly identified by non-farm participation behaviors in the context of multiple market imperfections. Design/methodology/approach – The paper develops a model to analyze agricultural household's non-farm participation based on heterogeneous asset endowments. The model is applied to recent data from Zhouzhi, a mountainous county in rural western China. Findings – The paper shows that human capital, social capital and other capital assets have significant but different effects on the agricultural household's participation in non-farm activities, and they help to break down non-farm labor constraints. Nonseparability holds only for those households unable to participate in non-farm activities due to poor asset endowments. Originality/value – The agricultural household model developed in this paper and its application in China provide insights into theory and empirical analysis of agricultural households' behavior and rural development.