Property Rights, Labor Markets, and Efficiency in a Transition Economy: The Case of Rural China
This paper investigates the consequences of imperfect and uneven factor market development for farm efficiency in rural China. In particular, we estimate the extent to which an inverse relationship in farm productivity can be attributed to the administrative (instead of market) allocation of land, and the extent of unevenly developed non-agricultural opportunities. Using a recently collected household survey, we show that a considerable amount of inefficiency exists in the countryside, especially in the employment of labor. Our results show that this inefficiency is alleviated by the development of external labor markets, but perhaps more surprisingly, that in the context of the current imperfect market environment, administrative reallocations help improve both efficiency and equity on the margin. They do not go far enough, however, which raises important questions about constraints on rental activity and the link between administrative reallocation and decentralized land exchange.
|Date of creation:||11 Apr 2000|
|Date of revision:|
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"Markets, Human Capital, and Inequality: Evidence from Rural China,"
William Davidson Institute Working Papers Series
298, William Davidson Institute at the University of Michigan.
- Dwayne Benjamin & Loren Brandt & Paul Glewwe & Li Guo, 2000. "Markets, Human Capital, and Inequality: Evidence from Rural China," Working Papers benjamin-00-01, University of Toronto, Department of Economics.
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Policy Research Working Paper Series
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- Matthew A. Turner & Loren Brandt & Scott Rozelle, 1999. "Property Rights Formation and the Organization of Exchange and Production in Rural China," William Davidson Institute Working Papers Series 250, William Davidson Institute at the University of Michigan.
- Benjamin, Dwayne & Brandt, Loren, 1997. "Land, Factor Markets, and Inequality in Rural China: Historical Evidence," Explorations in Economic History, Elsevier, vol. 34(4), pages 460-494, October.
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- Benjamin, Dwayne, 1995. "Can unobserved land quality explain the inverse productivity relationship?," Journal of Development Economics, Elsevier, vol. 46(1), pages 51-84, February.
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