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Land Reallocations, Passive Land Rental, and the Development of Rental Markets in Rural China

  • Kung, James Kai-sing
  • Shimokawa, Satoru
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    Based on a unique farm survey, this article intends to shed new light on the intriguing relationship between administrative land reallocations and the development of land rental markets in China. We find that the two alternative mechanisms of allocating arable land tend to be substitutes where land is reallocated “partially” only among households affected by demographic change (PLR). Where village-wide or “full-scale” reallocations (FSLR) are conducted among all households, however, land rental market transactions have increased in response to the enlarging mismatch in labor-land ratios across households; transactions that would not have occurred otherwise. While inefficient in the short-run, FSLR potentially facilitates the development of land rental markets as it unwittingly brings together parties with a mere arms-length relationship (e.g., non-relatives) to contract with each other, in light of the finding that households affected by PLR tend to lease land primarily to/from their own relatives or through the village authorities.

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    Paper provided by International Association of Agricultural Economists in its series 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil with number 125099.

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    Date of creation: 2012
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    Handle: RePEc:ags:iaae12:125099
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    1. Li, Guo & Rozelle, Scott & Brandt, Loren, 1998. "Tenure, land rights, and farmer investment incentives in China," Agricultural Economics, Blackwell, vol. 19(1-2), pages 63-71, September.
    2. 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.
    3. Deininger, Klaus & Jin, Songqing, 2005. "The potential of land rental markets in the process of economic development: Evidence from China," Journal of Development Economics, Elsevier, vol. 78(1), pages 241-270, October.
    4. Yang Yao, 2000. "The Development of the Land Lease Market in Rural China," Land Economics, University of Wisconsin Press, vol. 76(2), pages 252-266.
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