Property Rights, Labour Markets, and Efficiency in a Transition Economy: The Case of Rural China

38 Pages Posted: 18 Mar 2003

See all articles by Loren Brandt

Loren Brandt

University of Toronto - Department of Economics; IZA Institute of Labor Economics

Dwayne Benjamin

University of Toronto

Multiple version iconThere are 2 versions of this paper

Date Written: 2002

Abstract

This paper investigates the consequences of imperfect and uneven factor market development for farm efficiency in rural China during transition. 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 labour. Our results show that this inefficiency is alleviated by the development of external labour markets, and that in the context of the current imperfect market environment, administrative reallocations help improve on the margin both efficiency and equity. They do not go far enough, however, which raises important questions about constraints on rental activity, the link between administrative reallocation and decentralized land exchange, and property rights formation more generally.

Keywords: Rural institutions, property rights, labour markets, transition economies, farm efficiency

JEL Classification: D23, J43, Q15, O12

Suggested Citation

Brandt, Loren and Benjamin, Dwayne, Property Rights, Labour Markets, and Efficiency in a Transition Economy: The Case of Rural China (2002). William Davidson Institute Working Paper No. 518. Available at SSRN: https://ssrn.com/abstract=375220 or http://dx.doi.org/10.2139/ssrn.375220

Loren Brandt (Contact Author)

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S 3G7
Canada
416-978-4442 (Phone)
416-978-6713 (Fax)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Dwayne Benjamin

University of Toronto ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-978-6130 (Phone)
416-978-6713 (Fax)

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