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Property Rights, Land Misallocation and Agricultural Efficiency in China

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.

Authors: 
A.V. Chari, University of Sussex
Elaine Liu, University of Houston
Shing-Yi Wang, University of Pennsylvania
Yongxiang Wang, University of Southern California
Publication Date: 
December, 2017
Keywords: 
Publication Status: 
Document Number: 
2017-091
File Description: 
First version, November, 2017