Land Rental Development in Rural Jiangsu, China:

Transaction Cost-saving Effects via the Rural Shareholding Cooperative System

Abstract

Preceding studies demonstrate that there are two important prerequisites that facilitate land rental in agriculture; one is outmigration of farm labor, and the other is the securement of farmers' land rights. This is especially true for the counties and/or regions where the farm sector is overemployed and farmland has yet to be privatized. Considering these empirical findings quite tenable, this paper pays special attention to rural shareholding cooperatives (RSCs) that have been established recently in rural China. Our econometric analyses suggest that RSCs play an important role in reducing transaction costs associated with land-use right movements, and thereby encourage land rental/consolidation activities and new entry of non-farm-household entities into farm management. Worthy of emphasis is the fact that RSCs help clarify farmers' property rights, through which they become better able to transfer their land-use rights without any hesitation.