Land reallocation responses to China's New Rural Pension Scheme: Evidence from a regression discontinuity design

Abstract

This study examines how labor reallocation has been associated with land reallocation following the implementation of the New Rural Pension Scheme (NRPS) in 2009. Based on data from the China Health and Retirement Longitudinal Survey (CHARLS) gathered during two periods (2013 and 2015), it uses the discrete changes generated by the new program's rules to identify the impact on land reallocation, as represented by the amount of land rented out by the elderly and their spouses. The age 60 NRPS eligibility threshold is associated with large increases in land rented out. The most important channel identified is the increase in the number of adult-children migrants, which reduces the number of farm workers and may help relax credit constraints. In contrast, the NRPS program has had no impact on the extent of elderly labor; there are no changes in their time spent caring for grandchildren or paid work in the labor market. A deeper examination of the welfare effect shows that despite labor and land reallocation, the NRPS has had no impact on either household consumption or elderly well-being. This study contributes to the literature by connecting land (as a factor of production) with the pension scheme, which may have policy implications regarding how money transfer programs would affect land and labor reallocation and individual welfare in other countries in the global context.