This paper examines the impact of a property rights reform in rural China that allowed farmers to lease out their land. The authors 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. They also find that the reform increased the responsiveness of land allocation across crops to changes in crop prices.
This work is part of the ‘Rural Property Rights, Returns to Scale and Contracts’ project
A.V. Chari, Elaine M. Liu, Shing-Yi Wang, Yongxiang Wang (2017) Rural Property Rights Reform and Agricultural Efficiency in China. NBER Working Paper No. 24099, December 2017
Rural Property Rights Reform and Agricultural Efficiency in China
Published 31 December 2017