The land rental of Chinese rural households and its welfare effects

By using the survey data of China's rural households from 2003 to 2009, we identified the determinants of renting in and out the plots and estimated their impact on household welfare. First, we developed a bivariate dynamic probit model for the behaviors of renting in and out to manage the impact of the intertemporal decision-making that has been somewhat ignored by the literature; next, we developed a panel multiple endogenous treatment effect model for land rental impact to manage the self-selection problem stemming from the unobserved variables. The results show that regardless of renting in or out, both scenarios have statistically significant positive effects on the net income and balance of disposable financial assets, and renting out also has a significant positive effect on consumption expenditure.