Despite reforms to the hukou household registration system and the very large rural-urban migration experienced in China, rural households are still experiencing a risk of losing their land allocation if they migrate. We argue that this risk leads to an inefficient rental market with low rents and is an impediment to migration, with consequent over-employment in agriculture and low productivity.
The Rural Land Contracting Law (RLCL), announced in 2003, is a landmark law for agricultural households in rural China. It provides new legal protections for leasing agricultural land. In theory, increasing free market exchanges of land should improve agricultural productivity by facilitating the movement of land towards the most productive users. We find that the property rights reform led to a 10 percent increase in land rental activity among rural households, a redistribution of land towards more productive farmers, and a 7 percent increase in the aggregate productivity of land. We also observe an increased responsiveness of land allocation across crops to changes in crop prices.
Our research studies the incentive costs of China’s housing booms . We use the type and actual time stamps of 9.3 million credit card transactions by over 200,000 cardholders to detect non-work-related behavior during work hours. Employees respond to positive house price shocks with an immediate and permanent increase in their propensity to use work hours to attend to personal needs. Our estimate implies an elasticity of shirking propensity with respect to house price of 1.6. The effect is driven by homeowners, especially among owners with higher housing wealth. Further analyses point to negative productivity implications of the increased shirking.
We explore the role of interest rates in monetary policy transmission in China in the context of its multiple instrument setting. In doing so, we construct a new series of monetary policy surprises using information from high frequency Chinese financial market data around major monetary policy announcements. We find that a contractionary monetary policy surprise increases interest rates and significantly reduces inflation and economic activity. Our findings provide further support to recent studies suggesting that monetary policy transmission in China has become increasingly similar to that in advanced economies.
In our recent work (Couture et al., 2018), we combine an experiment that we implement across Chinese villages with a new collection of survey and administrative microdata to provide evidence on the potential of e-commerce integration to foster economic development in the countryside. We also explore the underlying channels and the distribution of the gains from e-commerce across households and villages.