Can a Rural Collective Property Rights System Reform Narrow Income Gaps? An Effect Evaluation and Mechanism Identification Based on Multi-Period DID

For a long time, low efficiency in the transfer of rural collective land use rights and the ambiguous attribution of collective land property rights have not only restricted the mobility of rural labor factors but have also hindered the release of vitality in the rural collective economy. This has resulted in lagging growth in the income that rural residents obtain from collective economic factors, contributing to the persistent widening of the urban/rural income gap. As an important institutional innovation to address these issues, the effects of the reform of the rural collective property rights system urgently need to be clarified. The reform of the rural collective property rights system constitutes a major initiative in the transformation of the rural land system. Centered on asset verification and valuation, as well as the demarcation of membership rights and the restructuring towards a shareholding cooperative system, it aims to establish a collective property rights regime characterized by clearly defined ownership and fully functional entitlements. This study takes the national pilot reform of rural collective property rights launched in 2016 as a quasi-natural policy experiment, systematically examining the impact of this pilot policy on the internal income gap within households and its spillover effects on the urban–rural income gap. Based on microdata from the China Household Finance Survey (CHFS) and the China Longitudinal Night Light Data Set (PANDA-China), this study constructs a five-period balanced panel dataset covering 2304 rural households across 25 provinces. A relative exploitation index based on the Kawani index is constructed, and empirical analysis is conducted using a combination of multi-period difference-in-differences (Multi-period DID), discrete binary models, and propensity score matching-difference-in-differences (PSM-DID) models. The results show that: First, the pilot reform significantly reduced the level of income inequality within rural areas in the pilot regions, and its policy benefits further generated positive spillovers via market-driven factor allocation mechanisms, effectively bridging the urban–rural income gap. Second, institutional reforms activated the potential of rural non-agricultural economic factors, establishing new channels for a two-way flow of urban and rural factors, becoming an important path to achieve the goal of common prosperity. Third, the policy effects exhibited significant heterogeneity, specifically manifested in the attributes of major grain-producing regions, initial household income levels, and the human capital characteristics of household heads having significant moderating effects on reform outcomes. This study not only provides theoretical support and empirical evidence for deepening rural property rights reforms under the new rural revitalization strategy, but it also reveals the driving role of institutional innovation in factor mobility, thereby influencing the transmission mechanism of income distribution patterns. This finding offers a China-based solution for developing countries to address the imbalance in urban–rural development and the widening income gap.