Hazards of Expropriation: Tenure Insecurity and Investment in Rural China
Hanan G. Jacoby, Guo Li, Scott Rozelle
American Economic Review · 2002 · Volume 92 · Issue 5
DOI: 10.1257/000282802762024575
Abstract
We use household data from northeast China to examine the link between investment and land tenure insecurity induced by China's system of village-level land reallocation. We quantify expropriation risk using a hazard analysis of individual plot tenures and incorporate the predicted "hazards of expropriation" into an empirical analysis of plot-level investment. Our focus is on organic fertilizer use, which has long-lasting benefits for soil quality. Although we find that higher expropriation risk significantly reduces application of organic fertilizer, a welfare analysis shows that guaranteeing land tenure in this part of China would yield only minimal efficiency gains.
Keywords
Socialist Systems and Transitional Economies: Political Economy, Property Rights, Collectives, Communes, Agriculture, Land Ownership and Tenure, Land Reform, Land Use, Irrigation, Agriculture and Environment
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