Enrollment in public pension program and household land transfer behaviour: Evidence from rural China

ABSTRACT

Although farmland transfer is a radical solution to the problem of sustainable development of the land rental market in China, there is insufficient research that attempted to quantitatively explore the determinants of land transfer behaviour, particularly the effects of enrolment in public pension programs. In this paper, we examine how enrolment in the recently established and expanded New Rural Pension Scheme (NRPS) can affect land transfer decisions among the age-eligible and age-ineligible rural residents. Specifically, our study employs balanced panel data from the first two waves of the China Family Panel Studies (CFPS) in the year 2010 and 2012. It reveals that, although the enrolment in the public pension system increases the scale of farmland transfer among age-eligible people, this effect is not shown among age-ineligible members. Moreover, for households with members over the age of 60, the positive income effects are concentrated among farmers from low-income family; for other groups, the heterogeneous outcomes are insignificant. These estimates may offer insights for the dynamic adjustments of the public pensions for the elderly population and for enhancing the vitality of land transfer in rural China.

KEYWORDS:

• Public pension
• land transfer
• rural household
• China

JEL CLASSIFICATION:

• H55
• I38
• Q15
• R20

Acknowledgement

The authors thank Professor Chuanchuan Zhang for granting access to the data of listed counties covered in the New Rural Pension Scheme of China. They also thank Editor Professor Peel and anonymous reviewers for valuable comments.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ In 2008, the definition of ‘land transfer’ was officially interpreted by the central government as follows: only the management rights of farmland can be transferred; the contracting right belongs to authorized farmers and must remain unchanged; the ownership right belongs to rural collectives and must also stay unchanged in all cases.

² This reform has shaped the rural land property rights system in the new period and is regarded as one of the major institutional innovations in China’s rural reform since the household contract responsibility system was established in 1978.

³ In practice, 100 yuan per year is the most popular contribution level (Lei, Zhang, and Zhao 2013).

⁴ The data are derived from government reports. Available online: http://www.mohrss.gov.cn/ncshbxs/NCSHBXSgongzuodongtai/200909/t20090921_83847.html.

⁵ The Chinese government increased the essential pension benefit to 88 yuan per month in 2019. Available online: http://www.gov.cn/premier/2019-03/16/content_5374314.htm.

⁶ The data derive from the government report. Available online: http://www.mohrss.gov.cn/ncshbxs/NCSHBXSgongzuodongtai/201406/t20140627_132808.html.

⁷ The rate of return equals the one-year time deposit interest rate issued by the People’s Bank of China.

⁸ To ensure the representativeness of the sample, the project team adopts three stages of stratified sampling design and the probability-proportional-to-size sampling strategy to survey people in the mainland of China. The survey included the information of 14,798 households from 635 villages/communities in 162 counties/districts distributed in 25 provinces (excluding Tibet, Qinghai, Xinjiang, Ningxia, Inner Mongolia, Hainan, Hong Kong, Macao and Taiwan), and the rural and urban samples accounted for 55.40% and 44.60%, respectively. Notably, the CFPS was also conducted in 2014, 2016 and 2018. This paper employed the first two waves in the 2010 and 2012, due to the reason that the NRPS was covered by all geographic areas by 2012. Since then, almost no significant change has taken place for this pension system.

⁹ The CFPS data set covers a total number of 162 counties. Our sample includes 127 counties: 19 (15%) are part of the first-wave pilot counties in 2009, 12 (9%) are part of the second-wave in 2010, 53 (42%) are part of the third-wave in 2011, and the rest of 43 (34%) are part of the fourth-wave in 2012.

¹⁰ We cannot identify the definite dates of program initiation for every county. Since the central government made announcements about the first two waves of pilots on 30 September 2009 and 1 October 2010, respectively, we assume that it was October 2009 for the first-wave pilot counties, October 2010 for the second-wave pilot counties. The third-wave of pilots published in July 2011.

¹¹ Notably, because the age of all household heads in the panel data increases by two years, we do not control for the age of the household head. Similarly, we do not control for the years of schooling of the household head, because this study employs the FE estimation with panel data, and the majority of household head’s education level hardly changes significantly during two years.

Additional information

Funding

The work was supported by the National Natural Science Foundation of China [71773071], the National Planning Office of Philosophy and Social Science [22ZDA049 and 21CSH011] and the Shanghai University of Finance and Economics graduate student innovation fund [CXJJ-2020-319].