Land Property Rights and Rural Enterprise Growth: Evidence from Land Titling Reform in China

Abstract

We exploit a large-scale land titling reform in China that clearly entitles rural households to
land rights by issuing uniform land use certificates and study how this impacted entrepreneurship
in rural areas. We find that the reform significantly increases business creation in rural
areas without decreasing the quality of new entrants or incumbent businesses. It also spurs
entrepreneurship among professional and large farmers and attracts more urban residents
to start new businesses in rural areas. Additional analysis provides evidence that increased
land and labor availability and productivity, and improved social trust may serve as the
mechanisms underlying these effects. Altogether, these results reveal that well-defined land
property rights have enabled more enterprise growth in rural areas.

Keywords: Land Property rights, Enterprise, Collateral, Labor mobility, Social trust

JEL Classification: J15, L26, M13