Rural Collective Property Rights System Reform and Urban-Rural Income Gap: A County-Scale Big Data Analysis in China

Property rights reform has been widely regarded as a powerful tool to narrow the urban-rural income gap (URIG). A recent nationwide property rights reform in China, namely, the rural collective property rights system reform (RCPRSR) was implemented in 2015, offering rural residents rights to rural collective assets, especially land assets. However, whether it can help to narrow URIG or not remains controversial. Based on 2,322 county-level big panel data in China from 2010 to 2019, this paper takes RCPRSR as a quasi-natural experiment and empirically evaluates its impact and mechanism on URIG by using a time-varying difference-in-differences (DID) model. The findings suggest that RCPRSR can decrease URIG by 4.2%, and this conclusion is still reliable after six robustness tests. Heterogeneity analysis shows that the positive effect of RCPRSR on narrowing URIG is significant in eastern and northeastern China, but not in central and western China. Mechanism analysis shows that RCPRSR can decrease URIG mainly through optimizing the industrial structure and improving the agricultural mechanization level. This study provides a reference on how to mitigate URIG through property rights reform in developing countries. JEL Classification: O20, D31, D63.