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Land rental markets as an alternative to government reallocation? equity and efficiency considerations in the Chinese land tenure system

Author

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  • Deininger, Klaus
  • Songqing Jin

Abstract

The authors develop a model of land leasing with agents characterized by unobserved heterogeneity in ability and presence of an off-farm labor market. In this case, decentralized land rental may contribute to equity and efficiency goals and may have several advantages over administrative reallocation. The extent to which this is true empirically is explored using data from three of China's poorest provinces. The authors find that both processes redistribute land to those with lower endowments but that land rental markets are more effective in doing so and also have a larger productivity-enhancing effect than administrative reallocation, implying that more active land rental markets would allow producers to realize significant productivity gains. At the same time, the presence of a large number of producers whose participation in rental markets remains constrained suggests that efforts to reduce transaction costs in land rental markets would be warranted.

Suggested Citation

  • Deininger, Klaus & Songqing Jin, 2002. "Land rental markets as an alternative to government reallocation? equity and efficiency considerations in the Chinese land tenure system," Policy Research Working Paper Series 2930, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2930
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    References listed on IDEAS

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    1. Rosenzweig, Mark R & Wolpin, Kenneth I, 1993. "Credit Market Constraints, Consumption Smoothing, and the Accumulation of Durable Production Assets in Low-Income Countries: Investment in Bullocks in India," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 223-244, April.
    2. Dwayne Benjamin & Loren Brandt, 2002. "Property rights, labour markets, and efficiency in a transition economy: the case of rural China," Canadian Journal of Economics, Canadian Economics Association, vol. 35(4), pages 689-716, November.
    3. 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.
    4. Hanan G. Jacoby & Guo Li & Scott Rozelle, 2002. "Hazards of Expropriation: Tenure Insecurity and Investment in Rural China," American Economic Review, American Economic Association, pages 1420-1447.
    5. Carter, Michael R. & Yang Yao, 1999. "Market versus administrative reallocation of agricultural land in a period of rapid industrialization," Policy Research Working Paper Series 2203, The World Bank.
    6. Alston, Lee J & Libecap, Gary D & Schneider, Robert, 1996. "The Determinants and Impact of Property Rights: Land Titles on the Brazilian Frontier," Journal of Law, Economics, and Organization, Oxford University Press, vol. 12(1), pages 25-61, April.
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    Citations

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    Cited by:

    1. Deininger, Klaus & Jin, Songqing & Berhanu, Adenw & Samuel, Gebre-Selassie, 2001. "Mechanisms for Land Transfer in Ethiopia: implications for Efficiency, Equity and Non-Farm Development," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 10(1).
    2. Wu, Ziping, 2006. "Land Distributional and Income Effects of the Chinese Land Rental Market," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25294, International Association of Agricultural Economists.
    3. Hans P. Binswanger-Mkhize & Camille Bourguignon & Rogier van den Brink, 2009. "Agricultural Land Redistribution : Toward Greater Consensus," World Bank Publications, The World Bank, number 2653.
    4. Denis Nitikin & Chunli Shen & Qian Wang & Heng-fu Zou, 2011. "Land Taxation in China: Assessment of Prospects for Politically and Economically Sustainable Reform," CEMA Working Papers 431, China Economics and Management Academy, Central University of Finance and Economics.
    5. Banco Mundial, 2004. "Colombia: Una Política De Tierras En Transición," DOCUMENTOS CEDE 002146, UNIVERSIDAD DE LOS ANDES-CEDE.
    6. Deininger, Klaus & Songqing Jin & Adenew, Berhanu & Gebre-Selassie, Samuel & Demeke, Mulat, 2003. "Market and non-market transfers of land in Ethiopia - implications for efficiency, equity, and non-farm development," Policy Research Working Paper Series 2992, The World Bank.
    7. Tu, Qin & Heerink, Nico & Xing, Li, 2006. "Factors Affecting the Development of Land Rental Markets in China A Case Study for Puding County, Guizhou Province," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25547, International Association of Agricultural Economists.
    8. Denis Nitikin & Chunli Shen & Qian Wang & Heng-fu Zou, 2012. "Evaluation of Land Taxation in China," Annals of Economics and Finance, Society for AEF, vol. 13(2), pages 489-528, November.

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