Land rights and investment incentives: Evidence from China’s Latest Rural Land Titling Program

Abstract

We compile a panel dataset from official surveys of 2010–2015 to study how China’s latest rural land titling program affected households’ long-term agricultural investment. Applying the DD method and the PSM-DD method, we find that the rural land titling program had a positive effect on households’ land-related investment (measured by the application of organic fertiliser). In addition, we present 3 pieces of evidence which support the view that the positive investment effect was due to enhanced incentives as a result of improved land tenure security. First, the investment effect was significant for land-related investment, but not significant for non-land-related investment (measured by the purchase of agricultural machinery). Second, the investment effect was stronger for the households that saw a greater improvement in their land tenure security. Third, the investment effect on households’ own contracted land was stronger than that on their rented-in land, unless the households had long-term (i.e., more than one year) written rental contracts for their rented-in land.