Does Land Rental Result in Defragmentation? Evidence from China

Land fragmentation is regarded as obstacle to agricultural productivity and remains serious in rural China. Many researchers suggest that developing land rental markets is one effective approach to land defragmentation, but few papers empirically confirm it. This paper employs Chinese provincial panel data from 2006 to 2016 to assess the relationship between land rental and fragmentation. The estimated results indicate that the number of land plots per farm household does not decline with land transfer rate increasing when considering the problem of endogeneity. And the farm households are likely to consolidate fragmented land through land rental markets when the probability to plant cash crops or expected income from land rental is high. Thus, land rental markets with informality and rigid land use control in rural China are unlikely to result in an effective defragmentation