Land documents, tenure security and land rental development: Panel evidence from China

- We investigate the impacts of land tenure security on lessors' choice of transfers to relatives versus non-relatives.
- A correlated random effect model is used to account for the endogeneity of land tenure security.
- Possession of land use rights documents and fewer major land reallocations encourage transfers to non-relatives.
- The effects of possession of land rights documents are stronger in 2008 than in 2000.

We use household and farm-plot level data from a two period panel survey covering six provinces in China to explore how tenure security, especially issuance of land documents, affected people's behavior in China's rural land rental market. A correlated random effect model is used to account for the endogeneity of document issuance and land reallocations. The econometric analysis shows that possession of documents and fewer major land reallocations encourage households to engage in land renting to non-family members, and the effects of land right documents are stronger in 2008 than in 2000.