The Development of the Land Lease Market in Rural China

This paper examines the development of the land lease market in rural China. Special attention is paid to productive heterogeneity among farmers and the openness of the labor market in activating the land lease market. A theoretical model is employed to explore the underlying connections. An econometric model is implemented using a two-period panel data set gathered in three counties of China's Zhejiang province. The results show that productive heterogeneity and a freer labor market do promote more land leases. The implications for the institutional change literature are discussed.