Understanding the impact mechanisms of China's Rural homestead transfer policy on household welfare: A perspective of labor migration

The rural homestead transfer (RHT) program, which the government in China is promoting in recent years, has noticeable impacts on household welfare. This paper constructs a theoretical framework of “government-promoted homestead transfer - multi-channels of labor migration - the welfare of households”, based on the data from three pilot selected areas, namely, Wujin district in Jiangsu, Yiwu city in Zhejiang and Changyuan county in Henan, uses Structural Equation Modeling (SEM) to explain the complex relation between government-promoted homestead transfer, labor migration, and component factors of household welfare. We found that RHT, directly or indirectly through the mediation of labor migration, had an overall positive influence on household income status, but negative effect on household living standard. RHT also had an overall positive effect on household social security, and negative effect on residential environment, although this effect was indirect, only through labor migration as a mediating variable. RHT also had a direct positive influence on the household psychological state. We conclude that rural homestead transfer and the resulting release of land for industrial construction create increased opportunities for off-farm employment, facilitating the farmers’ livelihood transition and leading to changes in household welfare components. Filling gaps in previous studies, the innovative contribution of our research covers both objective (material) and subjective (behavioral) dimensions of welfare, examines direct as well as indirect influence mechanisms, inclusion of indirect influences that through labor migration as a mediating variable. Also provides a comprehensive assessment of all five government measures that constitute the core of the RHT program.