Impact of subsidy on the new type of forestry operating entity's input: Moderating effect of the rising labor cost

Abstract

In an era marked by escalating social aging and labor costs, the forestry sector faces a critical juncture for sustainable development. Amidst these challenges, an opportunity arises to enhance forestry practices by examining the moderating impact of rising labor costs on emerging forestry entities. Employing instrumental variable Tobit models, this study rigorously analyzes the influence of subsidy levels on input factors within these enterprises. Drawing on a comprehensive data set of 485 survey responses from 15 counties and 6 provinces, this investigation reveals significant insights into the dynamics of forestry subsidies, input levels, and labor costs. It identifies a substantial positive correlation between forestry subsidies and both capital and labor inputs within these entities. However, it is the burgeoning labor costs that emerge as a pivotal driver, prompting a strategic reallocation of labor inputs toward capital factors. This strategic shift is driven by a nuanced interplay between labor‐saving capital and labor, resulting in a dynamic substitution effect that concurrently augments employed labor inputs. These findings underscore the imperative for tailored strategies to address the challenges posed by escalating labor costs and social aging within the forestry sector. In response, this study advocates for proactive approaches to forestry subsidy standards, emphasizing dynamic implementation to facilitate increased inputs. Additionally, broader allocation of forestry subsidies and an accelerated drive toward forestry transformation are identified as essential pathways toward fostering sustainable development and resilience amidst evolving socio‐economic landscapes.