Off-farm labor markets and the emergence of land rental markets in rural China

A nascent land rental market is emerging in rural China after almost two decades of rural reforms. That the timing of its emergence coincides with the acceleration of an off-farm labor market suggests that the development of one factor market may have induced the emergence of the other. Using a recent farm survey, we are able to show that households with active participation in off-farm labor markets, measured by the number of days worked, have indeed rented less land. Contrarily, our analysis fails to substantiate the hypotheses that administrative land reallocations, which is a property of China's land tenure system, and respectively grain quotas, tend to hamper the development of land rental transactions.