Moving Off the Farm: Land Institutions to Facilitate Structural Transformation and Agricultural Productivity Growth in China

Abstract

Agriculture made major contributions to China’s growth and poverty reduction, but the literature has rarely focused on the institutional factors that might underpin such structural transformation and productivity. Drawing on an 8-year panel of 1,200 households in six provinces, we find that land tenure insecurity, measured by past land reallocations, discourages households from quitting agriculture, and the recognition of land rights through formal certificates encourages the temporary migration of rural labor. A sustained increase in nonagricultural opportunities will reinforce the importance of secure land tenure, a precondition for successful structural transformation and continued economic attractiveness of rural areas.