Legal land transfer rights, labor migration and urban–rural income disparity: Evidence from the implementation of China's Rural Land Contracting Law in 2003

Abstract

Legal land transfer rights are the core of farmers' land property rights. This paper examines the urban-rural income distribution effect of legal land transfer rights, revealing the reasons and mechanisms for legal land transfer rights to reduce the urban-rural income disparity. Theoretical analysis shows that granting farmers legal land transfer rights and enhancing the protection of land transfer rights can help promote rural labor migration, thereby reducing the urban-rural income disparity. This study uses panel data of prefecture-level and above cities in China from 1999 to 2008 to examine the implementation of China's Rural Land Contracting Law in 2003 as a quasi-natural experiment to construct a difference-in-differences (DID) model for the empirical test. The findings reveal that legal land transfer rights can effectively promote rural labor migration and reduce the urban-rural income disparity due to labor migration. This paper's analysis provides a perspective for understanding the integrated development of urban and rural areas in developing countries. It indicates that guaranteeing farmers' land transfer rights is important for reducing urban-rural income disparity, leading to urban-rural integrated development.