Specialization without regret - transfer rights, agricultural productivity, and investment in an industrializing economy

A number of studies have examined the effects of secure tenure on agricultural investment and productivity. The authors also study the importance of rights to household residual income and land use being transferable. Contemporary China - where industrialization has spread rapidly, if unevenly - is a good place to study the economic effects of transfer rights as well as conventional security of tenure. Village collectives formally own land in China, so there can be no individual land sales, but farmers are sometimes entitled to sell their rights to use the land allocated to them under the household responsibility system. Whether a household has secure tenure depends on whether its landholding will be reduced if the household population declines, whether the landholding will be increased if the household population increases, and how frequent average land adjustments are under the household responsibility system. Analyzing panel data for a sample of farm households, the authors study the"investment regret mitigation effect", which results when greater transfer rights make households more willing to invest because they are less likely to regret such investments when they can recoup the investment value even if they exit farming. The authors find that transfer rights may be especially important in an industrializing economy. A property rights system with incomplete security of tenure but with strong transfer rights that permit"specialization without regret"- so farmers can recoup the value of an investment even if they exit farming - may have much to recommend it.Economic Theory&Research,Environmental Economics&Policies,Labor Policies,Banks&Banking Reform,Municipal Financial Management,Environmental Economics&Policies,Economic Theory&Research,Banks&Banking Reform,Municipal Financial Management,Municipal Housing and Land

Market versus administrative reallocation of agricultural land in a period of rapid industrialization

Under communal farm production, there was little incentive to work hard: the communal system guaranteed a livelihood, and there were few private gains from additional efforts. The reform that introduced the household responsibility system in China in the early 1980s sharpened individual work incentives by assigning specific plots and the rights to residual income to individual households. However, the household responsibility system left unresolved questions about the reallocation of land over time - questions that have become increasingly important (for both efficiency and equity) with the rapid growth of the non-farm economy. The authors use household and village data to show that the initially egalitarian distribution of land is becoming more dispersed over time. In what has become a hybrid property rights system, in some areas local village leaders (the cadre) were empowered to periodically redistribute land between households on the basis of economic and demographic changes among households. In other villages, households were granted much greater immunity against redistribution of any sort. Similarly, villages differed in the degree to which individual households could trade land among themselves. Some villages did not regulate the practice, and other required village approval or prohibited land rental relationships. The authors use simulated maximum likelihood methods to estimate hybrid panel models of the determinants of both market-based and administrative reallocation of land. They also use them to estimate the insecurity-induced investment costs of market-based reallocation of land. They find that administrative reallocation responds to the increasing inequality but non-market reallocations come at a significant cost in forgone investment.Labor Policies,Environmental Economics&Policies,Banks&Banking Reform,Public Sector Economics&Finance,Municipal Housing and Land,Environmental Economics&Policies,Banks&Banking Reform,Municipal Housing and Land,Urban Housing,Public Sector Economics&Finance

Engaging Disconnected Young People in Education and Work

Project Rise served 18- to 24-year-olds who lacked a high school diploma or the equivalent and had been out of school, out of work, and not in any type of education or training program for at least six months. After enrolling as part of a group (or cohort) of 25 to 30 young people, Project Rise participants were to engage in a 12-month sequence of activities centered on case management, classroom education focused mostly on preparation for a high school equivalency certificate, and a paid part-time internship that was conditional on adequate attendance in the educational component. After the internship, participants were expected to enter unsubsidized employment, postsecondary education, or both. The program was operated by three organizations in New York City; one in Newark, New Jersey; and one in Kansas City, Missouri

Interregiona;Decomposition of labor productivity differences in China, 1987-1997

The literature on regional disparities in China is both broad and deep. Nonetheless much of its focus has been on the effects of trade liberalization and national policies toward investment in interior provinces. Few pieces have examined whether the disparities might simply be due to differences in industry mix, final demand, or even interregional trade. Using multiregional input-output tables and disaggregated employment data, we decompose change in labor productivity growth for seven regions of China between 1987 and 1997 into five partial effects—changes in value added coefficients, direct labor requirements, aggregate production mix, interregional trade, and final demand. Subsequently we summarize the contributions to labor productivity of the different factors at the regional level. In this way, we present a new perspective for recent causes of China’s interregional disparity in GDP per worker.Decomposition; input-output analysis; productivity; regional disparity; China