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Efficiency of Land Allocation through Tenancy Markets: Evidence from China

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  • Shingo Kimura
  • Keijiro Otsuka
  • Tetsushi Sonobe
  • Scott Rozelle

Abstract

Tenancy markets provide an opportunity to trade land between labor-scarce farm households and labor-abundant households. In China and other rapidly growing countries in Asia where rural to urban migration is becoming active, facilitating well-functioning tenancy markets is important to increase farm size and farmer's income. In China, however, individual land rights are weak and in many communities land may be reallocated by village leaders to other households if it is rented out. We hypothesize that the risk of expropriation of rented-out land is a major constraint on land rental transactions in China. We find empirical evidence in support of this hypothesis using farm household data.

Suggested Citation

  • Shingo Kimura & Keijiro Otsuka & Tetsushi Sonobe & Scott Rozelle, 2011. "Efficiency of Land Allocation through Tenancy Markets: Evidence from China," Economic Development and Cultural Change, University of Chicago Press, vol. 59(3), pages 485-510.
  • Handle: RePEc:ucp:ecdecc:doi:10.1086/649639
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    1. Rozelle, Scott & Boisvert, Richard N., 1995. "Control in a dynamic village economy: The reforms and unbalanced development in China's rural economy," Journal of Development Economics, Elsevier, vol. 46(2), pages 233-252, April.
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    1. repec:gam:jsusta:v:9:y:2017:i:9:p:1645-:d:112167 is not listed on IDEAS
    2. Shimokawa, Satoru, 2015. "Is prohibiting land reallocation enough to promote development of farmland rental markets in China?," IDE Discussion Papers 543, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    3. Wang, Hui & Riedinger, Jeffrey & Jin, Songqing, 2015. "Land documents, tenure security and land rental development: Panel evidence from China," China Economic Review, Elsevier, vol. 36(C), pages 220-235.
    4. Muraoka, Rie & Jin, Songqing & Jayne, Thomas S., 2014. "Land Access, Land Rental and Food Security: Evidence from Kenya," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170244, Agricultural and Applied Economics Association.
    5. Ma, Meilin, 2017. "Earthbound Labor and Incomplete Exit from Farming in China: Multiple Distortions and Nonseparable Decisions," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258414, Agricultural and Applied Economics Association.
    6. repec:gam:jsusta:v:9:y:2017:i:11:p:1961-:d:116595 is not listed on IDEAS
    7. Keijiro Otsuka & Yanyan Liu & Futoshi Yamauchi, 2016. "The future of small farms in Asia," Development Policy Review, Overseas Development Institute, vol. 34(3), pages 441-461, May.
    8. repec:gam:jsusta:v:9:y:2017:i:10:p:1885-:d:115594 is not listed on IDEAS
    9. Hoken, Hisatoshi, 2012. "Development of land rental market and its effect on household farming in rural China : an empirical study in Zhejiang Province," IDE Discussion Papers 323, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    10. Songqing Jin & T. S. Jayne, 2013. "Land Rental Markets in Kenya: Implications for Efficiency, Equity, Household Income, and Poverty," Land Economics, University of Wisconsin Press, vol. 89(2), pages 246-271.
    11. repec:gam:jsusta:v:9:y:2017:i:8:p:1438-:d:108365 is not listed on IDEAS
    12. L Rachel Ngai & Christopher A Pissarides & Jin Wang, 2018. "China’s Mobility Barriers and Employment Allocations," Discussion Papers 1811, Centre for Macroeconomics (CFM).
    13. Keijiro Otsuka, 2012. "Economic Transformation of Agriculture in Asia: Past Performance and Future Prospects," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 9(1), pages 1-19, June.
    14. Ito, Junichi & Bao, Zongshun & Ni, Jing, 2016. "Land rental development via institutional innovation in rural Jiangsu, China," Food Policy, Elsevier, vol. 59(C), pages 1-11.
    15. Otsuka, Keijiro, 2012. "Presidential Address at 27th International Conference of Agricultural Economists, Foz do Iguaçu, Brazil : Food Insecurity, Income Inequality, and the Changing Comparative Advantage in World Agricultur," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 127068, International Association of Agricultural Economists.
    16. Keijiro Otsuka, 2014. "Viability of small-scale farms in Asia," Chapters,in: Handbook on Food, chapter 18, pages 462-481 Edward Elgar Publishing.
    17. Zhang, Yanjie & Wang, Xiaobing & Brümmer, Bernhard & Yu, Xiaohua, 2012. "The impact of land security and input allocation on farm household income," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126467, International Association of Agricultural Economists.
    18. Kung, James Kai-sing & Shimokawa, Satoru, 2012. "Land Reallocations, Passive Land Rental, and the Development of Rental Markets in Rural China," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 125099, International Association of Agricultural Economists.
    19. Ngai, L. Rachel & Pissarides, Christopher & Wang, Jin, 2018. "China's mobility barriers and employment allocations," LSE Research Online Documents on Economics 87619, London School of Economics and Political Science, LSE Library.
    20. Che, Yi, 2009. "Mismatch: land reallocations, recovery land rental and land rental market development in rural China," MPRA Paper 39794, University Library of Munich, Germany.
    21. Deininger, Klaus & Jin, Songqing, 2007. "Land rental markets in the process of rural structural transformation : productivity and equity impacts in China," Policy Research Working Paper Series 4454, The World Bank.
    22. Jia, Lili, 2012. "Land fragmentation and off-farm labor supply in China," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 66, number 66.

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