Mismatch: Land reallocations, recovery land rental and land rental market development in rural China

The purpose of this paper is to evaluate the relative impacts of full-scale land reallocation (FLR) and partial-scale land reallocation (PLR) on household land rental behavior in rural China.

Probit model, Tobit model and Semi-parametric model are used to provide empirical evidences.

Drawing upon an unique farm survey in 2003, the authors find that in rural China, FLR is more likely to follow egalitarian rule and PLR takes productivity of households into consideration. Econometric analysis provides two main findings. First, FLR has positive effect on household land rental behavior, possibly because egalitarian FLR creates a mismatch between household agricultural ability and land size and after FLR households have to participate in land rental market to adjust the mismatch. Second, PLR has negative effect on household land rental behavior which supports that land reallocation and land rental market are substitutes (Brandt et al., 2004).

The main contribution of this study is to show that FLR and PLR in rural China are motivated by two different rationales (i.e. FLR by egalitarian concerns and PLR by efficiency concerns).