| Summary/Abstract |
The adoption of high-value cash crops (HVCs) is considered an efficient way to improve farmers' productivity and welfare, although the systematic empirical evidence is limited. By exploiting an exogenous commercial shock for soybeans and microlevel rural survey data from Manchuria of China in the 1930s, where factor markets were relatively well functioning, this study investigates the influence of HVC cultivation on farmers' agricultural performance, welfare, and inequality both theoretically and empirically. We find that (i) larger farms devote a larger proportion of land to HVCs and that (ii) farmers who cultivate a larger proportion of HVCs have higher agricultural productivity, profit, net income, and expenditure. Furthermore, the adoption of HVCs lowers profit, income, and expenditure inequality by enhancing income from wages relative to land rents, which benefits households with less land.
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