Working Paper: NBER ID: w29666
Authors: Tasso Adamopoulos; Loren Brandt; Chaoran Chen; Diego Restuccia; Xiaoyun Wei
Abstract: Frictions that impede the mobility of workers across occupations and space are a prominent feature of developing countries. We disentangle the role of insecure property rights from other labor mobility frictions for the reallocation of labor from agriculture to non-agriculture and from rural to urban areas. We combine rich household and individual-level panel data from China and an equilibrium quantitative framework featuring sorting of workers across locations and occupations. We explicitly model the farming household and the endogenous decisions of who operates the family farm and who potentially migrates, capturing an additional channel of selection within the household. We find that land insecurity has substantial negative effects on agricultural productivity and structural change, raising the share of rural households operating farms by over 40 percentage points and depressing agricultural productivity by more than 20 percent. Comparatively, these quantitative effects are as large as those from all residual labor-mobility frictions. We measure a sharp reduction in overall labor mobility barriers over 2004-2018 in the Chinese economy, all accounted for by improved land security, consistent with reforms covering rural land in China during the period.
Keywords: land security; labor mobility; agricultural productivity; structural transformation
JEL Codes: E02; O11; O14; O4; Q1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| land insecurity (Q15) | agricultural productivity (Q11) |
| land insecurity (Q15) | labor mobility (J62) |
| labor mobility frictions (J69) | labor allocation decisions (J29) |
| land security improvements (Q24) | labor mobility barriers (J62) |
| land insecurity (Q15) | farming household dynamics (Q12) |
| farming household dynamics (Q12) | agricultural productivity (Q11) |