Unpacking the Effects of Rural Homestead Development Rights Reform on Rural Revitalization in China

Abstract

Rural homestead development rights (RHDR) reform is a pivotal tool to promote rural revitalization in China. Thus, identifying the impact of RHDR reform on rural revitalization is crucial for the successful implementation of rural homestead system reform in China. We propose a unified theoretical framework to unpack the effectiveness of RHDR reform by contrasting the effects of two approaches, i.e., the collective-oriented and the household-oriented strategies. Our theoretical analysis suggests that the two approaches affect rural revitalization differently through five channels, and the overall effects are stronger for the collective-oriented approach. Based on an unbalanced multi-period panel dataset from 2006 to 2018, we develop a comprehensive index system to measure rural revitalization. We then use propensity score matching combined with difference-in-difference model and two-way fixed effects model to identify the net effect of RHDR reform on rural revitalization. The baseline empirical results show that the rural revitalization performance of the treatment group with the RHDR reform is significantly higher on average than that of the control group. Further analysis shows that collective-oriented RHDR reform has a stronger impact than household-oriented RHDR reform on promoting rural revitalization. The findings in this study not only underpin the significance of rural homestead system reform to promote rural revitalization in China, but also shed light on the role of rural community in efficient land resources management in developing countries.

Keywords: land development rights; rural homestead; rural revitalization; China

JEL Classification: R28; R52; R58