Working Paper: NBER ID: w24099
Authors: AV Chari; Elaine M. Liu; Shingyi Wang; Yongxiang Wang
Abstract: This paper examines the impact of a property rights reform in rural China that allowed farmers to lease out their land. We find the reform led to increases in land rental activity in rural households. Consistent with a model of transaction costs in land markets, our results indicate that the formalization of leasing rights resulted in a redistribution of land toward more productive farmers. Consequently, the aggregate productivity of land increased significantly. We also find that the reform increased the responsiveness of land allocation across crops to changes in crop prices.
Keywords: Property Rights; Land Misallocation; Agricultural Efficiency; China
JEL Codes: Q15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| formalization of leasing rights (K12) | redistribution of land toward more productive farmers (Q15) |
| redistribution of land toward more productive farmers (Q15) | overall output and productivity of land (E23) |
| RLCL reform (K20) | responsiveness of land allocation across crops to changes in crop prices (Q15) |
| RLCL reform (K20) | improved efficiency in land use (R14) |
| RLCL reform (K20) | land rental activity (Q15) |
| RLCL reform (K20) | area of land rented out (Q15) |