Mismatch: Land Reallocations, Recovery Land Rental and Land Rental Market Development in Rural China

Abstract

Drawing upon a unique farm survey in 2003, I find that in rural China, Full-scale Land Reallocation (FLR) are more likely to follow egalitarian rule and Partial-scale Land Reallocation (PLR) take productivity of households into consideration. Econometric evidences shows two main results. First, FLR have positive effect on household land rental behavior, possibly because egalitarian FLR create a mismatch between household agricultural ability and land size and after FLR households has to participate in land rental market to adjust the mismatch. Second, PLR have negative effect on household land rental behavior which supports that land reallocation and land rental market are substitutes (Brandt, Rozelle and Turner, 2004).

Keywords: mismatch, egalitarian, recovery land rental, full-scale land reallocation, partial-scale land reallocation

JEL Classification: Q15, Q13