Securing property rights in transition: Lessons from implementation of China's rural land contracting law

Motivated by the emphasisis on secure property rights as a determinant of economic development in recent literature, we use village- and household-level information from about 800 villages throughout China to explore whether legal reform increased protection of land rights against unauthorized reallocation or expropriation with below-average compensation by the state. In addition to providing nation-wide evidence on a sensitive topic, we find positive impacts, equivalent increasing land values by 30 percent, of reform even in the short term that originated in villages where democratic election of leaders ensured a minimum level of accountability, pointing towards complementarity between good governance and legal reform. Implications for situations where individuals and groups hold overlapping rights to land are explored. (C) 2009 The World Bank. Published by Elsevier B.V. All rights reserved.