Winning Hearts after Tying Hands: The Political Impact of Land Titling in China

• In Event: Poster Session: Political Economy

Abstract

Property rights are crucial not only in economic development but also in modern governance. We show that property rights protection can increase the political support of property owners in an authoritarian government. A formal property rights system allows ordinary people to send information to upper-level principals through accusations of property rights violations by local official agents. This strategy of rule by law helps higher authorities set clear boundaries for the authorization obtained by subordinates and thus improve their legitimacy. We exploit an agricultural land titling reform in China. It provided formal legal land certificates to households, thus substantially improving property rights protection. We find that political support for the government rises after the reform. The increase in government approval is not likely attributed to improved household economic status, but instead to declines in expropriation behaviors from local government officials. The effect is stronger where informal institutions are weak before the reform. We provide evidence that increased political support is accompanied by more compliance with the state and a lower demand for rural elections.

We first construct a nationally representative individual-level panel dataset from the Chinese Family Panel Survey (CFPS) with more than 9,000 rural households and 21,000 individuals from 2012-2016. Exploiting the staggered implementation of the land titling reform, we find that land titling has significantly improved political support for the government. Following the reform, the political support of rural people increased by around 0.592 (0-10 scale), an 11.8 percent rise from the average value before the reform. This result survives various robustness checks, including employing alternative specifications and definitions of rural areas, conducting a placebo test with the urban sample, and considering confounding events.

We argue that the key mechanism behind political support is that it prevents local officials from violating the interests of farmers. We provide four sets of empirical results to support this mechanism. First, we present that land titling reform leads to a reduction in the predatory behavior of local officials, such as land expropriation, abnormal charges, and delays. Additionally, conflicts with government officials are also observed to decrease in reform counties. Second, we show that villagers make more lawsuits related to land expropriation against local governments and village communities after land titling. Third, we find a positive impact on farmers' perspectives on social security and corruption, two issues closely linked to the negative effects of China's land expropriation. Fourth, we show that the impact of land titling on political support is especially large in regions where informal property rights protection from large clans was weaker before reform.

Finally, we further discuss the government’s gains in citizens’ compliance with the state, following the increased political support. First, we investigate government policy compliance in rural areas. Specifically, we focus on the participation rates of villagers for medical insurance and the pension program implemented in rural areas by the government in recent years. The results show that the participation rates of the two programs witnessed significant growth after the titling reform. More importantly, we examine villagers’ turnout in local elections, which might weaken governments’ control of village leaders. We present evidence that the land titling reform results in a decline in voter turnout, suggesting a decrease in demand for election democracy.

Our study contributes to studying the institutions in authoritarian regimes in several ways. Firstly, our study sheds new light on the rationale for government to protect property rights. Property rights protection can be a useful governance tool for higher-level governments in the sense of rule by law, which limits undesirable actions of lower-level agents who prioritize their interests and, in turn, fosters greater public support for the government. Secondly, we speak to the literature about the consequences of protecting land property rights. We argue that in an authoritarian context with a principal-agent problem of governance, land titling can be a tool for autocratic principals to discipline their local agents and strengthen political support from farmers. Finally, our findings contribute to understanding the rise and fall of elections in authoritarian countries. In the early stage of development, the government and the citizens may strategically rely on grassroots elections to monitor local officials while boring the cost of attenuated control on them. As the government exploits institutional rules to improve local governance, the demand for voting in grassroots elections will decline.

Authors

• Zhi-An Hu, Central University of Finance and Economics

• Zhuo Nie

• Jiaqi Zhao, Peking University