产权对家庭投资、风险处理和政策偏好的影响：中国的证据

POLICY RESEARCH WORKING PAPER 2931 The Impact of Property Rights on Households' Investment, Risk Coping, and Policy Preferences Evidence from China KlausDeininger Songqing Jin The World Bank F Development Research Group Rural Development November 2002  I POLICY RESEARCH WORKING PAPER 2931 Abstract Even though It is widely recognized that giving farmers considered, led neither to an increase in inequality of more secure land rights may increase agricultural land distribution nor a reduction in households' ability to investment, scholars contend that, in the case of China, cope with exogenous shocks. Household support for such a policy might undermine the function of land as a more secure property rights is increased by their access social safety net and, as a consequence, not be sustainable to other insurance mechanisms, suggesting some role of or command broad support. Data from three provinces, land as a safety net. At the same time, past exposure to one of which had adopted a policy to increase security of this type of land right has a much larger impact tenure in advance of the others, suggest that greater quantitatively, suggesting that a large part of the tenure security, especially if combined with resistance to changed property rights arrangements transferability of land, had a positive impact on disappears as household familiarity with such rights agricultural investment and, within the time frame increases. This paper-a product of Rural Development, Development Research Group-is part of a larger effort in the group to assess the impact of land market policy. Copies of the paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Maria Fernandez, room MC3-542, telephone 202-473-3766, fax 202-522-1151, email address mfernandez2@worldbank.org. Policy Research Working Papers are also posted on the Web at http:// econ.worldbank.org. The authors may be contacted at kdeininger@worldbank.org or sjin@worldbank.org. November 2002. (34 pages) The Policy Research Working Paper Series disseminates the findings of twork in progress to encourage the exchange of ideas about development issues An objective of the series is to get the findings out quickly, even if the presentations are less than filly polished. The papers carry the nanies of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessanly represent the view of the World Bank, its Executive Directors, or the countries they represent. Produced by the Research Advisory Staff  The impact of property rights on households' investment, risk coping, and policy preferences: Evidence from China Klaus Deininger and Songqing Jin World Bank, Washington DC University of California, Davis CA We thank China 's State Statistical Bureau, in particular Zude Xie, Pingping Wang, Xinhua Yu, and CCER, especially Yang Yao, Justin Lin and Jing Lifor making available the data and assisting in the survey underlying this analysis We are also gratefulfor the helpful comments from Keiyjro Otsuka, Scott Rozelle and Michael Carter Support from the Norwegian ESSD Trust Fund (Environment Window) is gratefully acknowledged   The impact of property rights on investment, risk coping, and policy preferences: Evidence from China 1. Introduction and motivation The way in which property rights to land are defined and documented, the rights and obligations they convey, and the extent to which they facilitate exchange of land through rental or sales markets, have far-reaching implications not only for the productivity of land use but also for the social organization of communities and households' ability to cope with shocks. Land policies implemented by governments all over the world aim to strike a balance between these multiple and often conflicting objectives. Failure to appreciate the multi-faceted nature of land rights may lead to recommendations that are either not acceptable politically from the outset or, even if passed into law, may prove difficult or impossible to implement. Few countries illustrate the interaction between these equity and efficiency goals of land policies, and the need for such policies to respond to a constantly changing dynamic environment, better than China. The desire to change the social relations of production and at the same time to boost production, was the driving force underlying the collectivization of the late 195os. While this policy achieved equality in terms of land access, it was associated with a disastrous decline in productive performance and the starvation of millions (Johnson, 1998; Lin and Yang, 2000; Putterman and Skillman, 1993; Yao S.J. 1999). The desire to increase production through higher levels of individual responsibility and secure individual land use rights culminated in the adoption of the household responsibility system (HRS) in 1978. This measure, which gave 15-year land use rights to households proved hugely successful in terms of production and did not undermine the basic equality of land access which is credited with helping China to attain levels of nutritional security and human development that are much superior to those achieved by other countries at similar levels of development (Burgess, 2000).  With the evolution of the rural economy towards placing greater importance on investment, migration, and non-agricultural income sources, there is a discussion as to whether the mechanisms that were put in place in 1978 are still needed and/or the most appropriate. It is often argued that the restrictions put on land rights, in terms of their duration as well as the scope for redistribution, are no longer adequate to facilitate productivity-improving land transfers and to bring about an adequate level of investment, both of which would provide the framework for a dynamic evolution of China's rural economy. In response to fears fueled by reports of an investment-reducing impact of existing land rights arrangements, the Government has adopted a policy that would give longer and better documented land rights to the rural population. Whether or not to proceed more vigorously with the implementation of these measures is an issue of considerable interest and policy relevance. To provide a satisfactory answer, it will be necessary to look not only at the economic aspects of the new land rights arrangement but also at social issues and the impact of such a policy measure on asset accumulation and factors that determine its acceptability to the population. In this paper, we use information generated by a land policy experiment, conducted by the Chinese Government with the express purpose of providing insight into these issues, to gam a better understanding of these issues. The policy experiment in question consisted of the adoption of directives which, by eliminating the scope for periodic redistribution and increasing the duration for which land use nghts were awarded, provided land cultivators in Guizhou province with more secure land rights than were available in neighboring provinces. This allows a "real-world" assessment of the impact of land policy changes that is likely to be superior to what can be obtained from hypothetical studies that have, up to now, largely formed the basis for policy recommendations in this area. The ability to assess the impact of the policy change in a number of dimensions allows us to address the complexity of the issue and is also more likely to respond to the need of policy makers who, in addition to the economic impact of such a measure, are concemed about the longer-term equity impacts and social acceptability of such a policy. The fact that Guizhou is also one of China's poorest provinces adds relevance as, in this environment, other safety nets will be more scarce, implying that access to land would perform a particularly important role in insuring rural households against vulnerability. Ability to show that more secure land rights have no negative impact on households' ability to cope with shocks and are acceptable from a social point of view in this environment would lead one to expect similar results in other more advanced provinces, allowing broader applicability of the results. The paper is structured as follows. Section two provides a background on Chinese land tenure, the literature, and the characteristics of the land tenure expenment conducted in Guizhou. Section three describes the sample and, as a first approximation to measurement of the impact of different land 2  policies, compares descriptive statistics across the three provinces included in the survey. Section four provides more rigorous econometric evidence with respect to each of the questions under concern. Section five draws out implications for further research as well as policy conclusions for China by relating the results to recent changes in Chinese land policy. 2. The Chinese land tenure system Ever since the collectivization of the late 1950s, the dual goals of increasing output while maintaining broad equality in access to resources have been at the core of policy initiatives by the Chinese government. This section reviews the recent history of land relations in China with the goal of summarizing the discussion in terms of the advantages and disadvantages of more secure individual property rights. Based on a description of the nature of the policy experiment conducted in Guizhou province, we identify the nature of the issue underlying the discussion, and outline the three main research questions. These questions relate to agricultural investment, equity and human capital investment, and households' land right preferences that motivate the subsequent analysis. 2.1 Key events and policy issues Collectivization of production in China during the 1950s had disastrous consequences on output and the welfare of the rural population and led to widespread starvation and death (Johnson, 1998; Lin and Yang, 2000; Putterman and Skillman, 1993; Yao S.J. 1999). Adoption of individual use rights to land under the Household Responsibility System (HRS) in the late 1970s and early 1980s has contributed to increased productivity and output in rural areas (Lin 1992, Lin et al. 1994, McMillan et al 1989). However, output growth flattened in the late 1980s. Even though low grain prices, together with high taxes and quotas, and the associated reduction in the profitability of agricultural production are generally seen as the main variables underlying this phenomenon (Oi, 1999), it is widely held that more secure individual land tenure arrangements could improve performance of the agricultural sector and thus rural welfare in China. Proponents of measures to increase tenure security point to three ways in which China's land tenure system has limited tenure security on the part of farmers. One is that the duration of land use rights was limited. Immediately following introduction of the HRS, producers received land rights for a period of only 15 years. Also, there was little legal foundation to villagers' land use "contracts", which were often only a verbal agreement. The lack of clear documentation, together with absence of independent mechanisms for appeal, is assumed to have contributed to great tenure insecurity. This is particularly important since, even during the 15-year period for which they were granted, such land 3  use rights were in many cases quite insecure. Changes in population or the community's need to obtain land for non-agncultural purposes such as infrastructure or local enterprises have often led to administrative reallocations of land within the village. A nationally representative survey suggests that about 80% of communities experienced at least one reallocation of land between 1983 and 1990 (Nyberg and Rozelle, 2000). In 1996, the number of reallocations experienced by an average village since the inception of the HRS in the early 1980s was estimated at 1.7. Decisions on reallocations were made in a decentralized manner and arrangements for govemance at the local level seem to have had a significant impact on the final outcome (Tumer et al., 1998). Reports suggest that in some cases local cadres may have used their power over the land as a means of extraction rent from farmers (Huang 1999; Johnson 1995). In 1999, the Chinese Govermment revisedthe 1986 Land Management Law in order to improve tenure security. This revision requires that all farmers receive written 30-year land use contracts and that the scope for readjustments is either circumscribed or completely eliminated. Evidence of mitial implementation shows, however, that much remains to be done to translate these legal provisions into effective tenure security. A recent survey in 17 provinces found that, although 60% of households are estimated to have held written land tenure contracts, only 13% of these contracts rule out further land readjustments, 25% explicitly allow for re-adjustments, and the remainder contain unclear or contradictory provisions (Schwarzwalder et al., 2001). As a consequence, only 12% of farmers were confident that there will be no more adjustments, implying that the impact of the legal provisions on farmers subjective tenure security has been limited. Was such a revision justified? Should it be implemented more quickly? These questions are not only relevant in terms of policy but have also been subject to considerable academic debate. 2.2 The Guizhou experiment To provide evidence that could help clarify these issues, and to guide the policy discussion in this area, the Chinese Government has encouraged provinces and counties to implement a number of land rights "experiments".' In 1987, Meitan county in Guizhou province was designated by the State Council as one of the initial 18 national experiment zones for rural reform. The "experiment" undertaken there consisted of the introduction of long-term land use rights, prohibition of redistribution (initially for 20 years for paddy land), and the policy of no land readjustment in response to changes in household size. In 1994, when the 15 year contract (starting in 1979) ended, the Guizhou Communist Party Committee issued a document requiring that, in the whole province, "the term of the contract be extended for another 30 years for arable land, and 60 years for non-arable land. The policy of 'no land increase for 4  new population, no land decrease for reduced population' should be continued." At the end of 1997, the party committee issued another document stipulating that "the contract term of arable land be extended for another 50 years (compared to 30 years nationally), and the term for non-arable land for another 60 years, both starting with 1994." This policy has been widely implemented by giving farmers certificates to the land they cultivate. Guizhou's early implementation of a policy that exogenously provides significantly longer and more secure land rights than was available to farmers in other areas of China provides an ideal case to assess the impact of such policies in comparison to other provinces. To explore this issue, we rely on a household survey that covered 1001 households from 110 villages in Guizhou, western Hunan, and Yunnan provinces. These provinces were chosen on the basis of their proximity and climatic and geographic similarity to Guizhou. The expectation was that farmers outside Guizhou would enjoy lower levels of tenure security than those within Guizhou. Comparing the impact of property rights arrangements in Guizhou, either directly through a variable indicating whether village leaders were aware of the adoption of the "two nos" policy, or indirectly through a provincial dummy, to those in other provinces, provides a mechanism to ascertain the impact of the policy on the vanables of interest. In addition to the "two nos" policy, we add information on two other interventions in the sphere of property rights. One refers to villager perception of the transferability of land nghts within the village, an indicator that is justified in view of recent evidence suggesting the importance of transferable land nghts (Carter and Yao, 1999). A second indicator is whether villagers have received written land use certificates. Before describing the data.in more detail, we discuss the research questions to be addressed. 2.3 Research questions We intend to use these data to address three main questions, namely: (i)' whether changed land tenure arrangements had an appreciable effect on agricultural investment; (ii) whether land policy had a negative impact on equity and/or affected households' ability to cope with shocks, thereby causing a reduction in their ability to invest in physical and human capital or to access land, and; (iii) what determines households' preferences for specific land rights. The justification for each of these questions and their relation to the existing literature is discussed below. Agricultural investment.- A number of studies from China suggest that tenure insecurity may have affected economic outcomes in three ways. First, insecure tenure was found to prevent much needed investment in land improvement (Jacoby, Li, and Rozelle, 2001), something that may have had l Note that these were not randonized expenments and that no systematic evaluation of the impact was undertaken. 5  particularly negative consequences on former "wasteland" (Hanstad et al. 1998). Although less direct and systematic, there are indications that lack of tenure security contributed to environmentally unsustainable methods of cultivation and overexploitation of natural resources (Simil 1999; Nyberg and Rozelle, 2000).2 Second, the literature points to the fact that insecure tenure reduces the possibility of productivity-enhancing land transfers in the rental market and may result in under-utilization of land, especially in areas where rural non-farm employment is economically important (Liu, Carter and Yao, 1998). This is often believed to have led to economic inefficiencies because absence of land markets permitted a fragmented land holding structure (Chen and Davis, 1998). Finally, to the extent that land rental is seen as a signal for a household not needing its allocation of land, it would tend to reduce out-migration of households which would benefit both the migrants and the those who stay behind (Yang, 1999). Taken together, these factors have led to calls for policy-makers to consolidate and streamline reforms (Oi, 1999), and especially to strengthen households' property rights over land (Prosterman and Hanstad, 1998). Identifying the differences in land rights either through a provincial dummy or a direct indicator of whether or not the village had adopted the "two no" policy allows us to assess the impact of the change in land tenure regime. As the survey asked specifically for agricultural investments undertaken during different time periods, we should be able to capture a wider range of investments than has been available to other studies which often considered only very short term investments. Equity, investment, and land access: It is undisputed that in rural areas of China, as in many other transitional economies, access to land is a critical determinant of household welfare which, by contributing directly to home production and consumption, also helps to reduce vulnerability. This is of particular importance when, for cost and administrative reasons, a social welfare system is impossible to implement. The remarkable equality of opportunity that is established by the possibility of having periodic reallocations of land is often seen as a key reason for China's ability to attain higher levels of nutritional security and human development than other countries at similar levels of development (Burgess, 2000). Although, with an egalitarian distribution of endowments in place, markets could, in principle, help to re-allocate land in response to changes in family structure caused by births, out-migration, and deaths, it is often maintained that continued provision of administrative re-allocation will be needed for equity reasons (Dong, 1996). If this were the case, i.e. if the inability to redistribute land in response to population change that is associated with the award of more secure tenure would reduce the ability of the poor to cope with shocks, the equity gains might outweigh the 2 Rigorous assessment of the impact of shocks on changes of household consumption in the short term will require data on consumption that are collected with greater frequency In the absence of such data, we can use changes in asset endowments and explore the extent to which there are significant differences across provinces in households' strategies to cope with shocks, somethmg that could point towards a detnmental impact of land tenure in this respect 6  efficiency losses and on balance it may not be worth moving towards more secure tenure even if more secure land nghts increase households' propensity to make investments. To explore, whether, once an equitable initial allocation of land has been achieved, providing more secure long-term rights to land will negatively affect equity, we explore to what extent there are systematic differences across provinces in changes of household asset endowments over time.3 One possibility is that population change by itself has led to a worsening of the ownership and operational distribution of land. A second and more likely hypothesis is that households that experienced shocks dunng the period have, possibly due to a lack of access to land, had lower levels of investment. Both possibilities can be tested in a regression framework. Household land right preferences: Farmers' preferences in terms of land rights are of interest over and above the observed differences in outcomes because in a decentralized system it is unlikely that any policy can be successfully implemented unless it is supported by a majority of the local population. To explore this issue, we assess the extent to which households' preferences over different types of land rights are affected by differences in relative endowments; the ability to access other markets, especially those for insurance and credit; and the fact that they actually experienced the "two nos" policy regime. Identification of the extent to which endowments and access to markets for credit and insurance affect land right preferences allows us to asses the extent to which market imperfections not only persist but also reduce the benefits from better defined land rights for individual households. This could be used to identify complementary policy measures that could contribute to a higher acceptability or better distribution of the gains from well-defined property rights. Identifying factors that affect farmers' preferences will allow one to better appreciate the complexity of such rights and, by assessing the likely future evolution of exogenous variables, also help to predict the likely change in preferences resulting from broader economic development. In addition, finding a significant positive impact of past adoption of a specific land policy measure would point towards a learning effect, the magnitude of which can be compared to the impact of other factors. A significant literature building on hypothetical questions has emerged and largely finds household opinion to be strongly against a policy of "no redistribution" (Kung 1995; Kung and Liu 1997; Brandt et al. 2001). Even though our sample is not nationally representative, it is based on real life experience rather than hypothetical questions and allows detailed assessment of the interaction of various factors and market imperfections in shaping such preferences. This allows us to avoid situations where interviewees fail 3If this were the case, one would have to ask whether the efficiency gains of such a move would be large enough to potentially compensate those who lose out and whether, at the local level, mechanisms exist to actually implement such compensation 7  to comprehend the implications of a hypothetical situation which they have not actually experienced themselves and,4 as a consequence, exhibit a strong bias towards the status quo. 3. Data sources and descriptive evidence This section describes the sample and nature of the data used in subsequent analysis by presenting descriptive statistics on household characteristics and changes in the inequality of endowments, investment, shocks, and coping strategies, and preferences regarding land rights. We find that, despite differences in sources of income, and especially the extent of migration, means of most household characteristics such as income levels are quite similar across provinces in the sample. Investment in enterpnse assets and consumer goods was the most prevalent, and even though a large number of households reported exposure to shocks, these did not contribute to an appreciable increase in the inequality of land endowment. Also, we find that support for the policy of no redistribution is high, especially in the provinces where this policy had been implemented before. 3.1 Characteristics of the sample The data used in the study are from a combined village and household survey conducted by the Rural Survey Team from China's State Statistical Bureau (SSB) in May and June of 2001. The survey covered 1001 households from 10 villages in three of China's poorest provinces with significant differences in land tenure arrangements, namely Guizhou, western Hunan, and Yunnan provinces. Guizhou province was chosen because it had implemented the "two nos" policy early on while western Hunan and Yunnan were chosen because of their proximity and their climatic and geographic similarity to Guizhou. Thus, the provinces have simnilar geographic and other characteristics but differ significantly in their land tenure arrangements which were changed by provincial decree in Guizhou. We thus expected to find that farmers outside this province would not enjoy the same level of tenure security than those within Guizhou. In addition to most of the vanables included in standard multi-purpose surveys such as household characteristics, expenditure, assets, different income sources, and agricultural production, the survey contained a number of modules that aimed to re-construct movements in population and key assets. To do so, information on individuals' employment history, their investment in productive agricultural assets, non-farm enterprises, consumer durables (including housmg), and changes in land endowments 4In many situations, households opted for administrative redistnbution of land as a means to shift land that had been left uncultivated because of out-migration to other users (Kung and Liu 1997). The fact that administrative redistnbutnon, rather than a decentralized market mechanism, was quoted as the mechanism of choice could be a reflection of respondents' lack of famihanty with the scope for operation of markets and the way they work 8  was obtained retrospectively for the time period starting in 1980. Similar information was obtained on the occurrence of shocks, households' responses to these shocks and their coping strategies.5 To obtain information on key village characteristics, a village level questionnaire was administered to village leaders, with a significant part of the information being obtained from village books. 3.2 Household and village characteristics Income size and composition: The households included in the sample are very similar with regard to total or per capita earned income, defined as the sum of wage income and profits (excluding family labor) from agriculture and non-agricultural enterprises. As illustrated in table 1, this figure amounts to between Y 1116 in Guizhou and Y 1468 in Hunan, clearly identifying all of the households in the sample as very poor (table 1).6 Despite some diversification of income sources, agricultural income, i.e. profits from crop and livestock production, still accounts for more than two thirds of earned income, varying from less than 69% in Guizhou to more than 74% in Yunnan. Other characteristics for households in the sample are fairly similar. For example, Guizhou has the largest family size, with 4.5 members per family, compared to 4.13 in Hunan and 4.22 in Yunnan. Village characteristics, as reported in table 2, point not only towards differences in overall size but also to differences in population growth. The mean annual rate of population growth (from 1985 to 2000) was 1.1% in Guizhou and Yunnan, but only 0.4% in Hunan. At the same time, the villages in the sample have by now virtually universal access to electricity. Inter-generational links: Although overall levels of earned income and household characteristics are similar across provinces, the composition of such income and the extent to which households are able to complement it with remittances differs across provinces. The survey indicates that, for the majority of households, remittances from farmly members who had migrated out and inter-generational transfers are of great importance. For those who receive them, remittances increase non-earned income by more than 50%. With 44% percent of households receiving remittances in the aggregate, regional differences are considerable; the share of households receiving remittances ranges from almost two thirds in Hunan to one third in Yunnan. On the other hand, providing resources for household members who have left the household, mainly for education, constitutes a significant burden - almost two thirds of households provide support for off-spring and for those who do so, the mean amount of support given is equal to 25% of earned income. 3.3 Land rights arrangements and preferences 5 Obtaining this retrospective information proved fairly easy in practice 6 Even though Hunan is much ncher than the other two provinces, limiting the sample to the mountaineous part in the west of the province implies that per capita incomes are very similar 9  We are interested in three interrelated though distmct types of land right interventions, namely the extent to which the "two nos" policy has been adopted, whether households have been awarded certificates that document their land holdmgs, and whether or not land rental is allowed. Concerning the adoption of the "two no" policy, we observe clear differences between Guizhou and the other two provinces. In Guizhou, 93% of all villages report not having taken any action following an increase in population, as compared to less than half of all villages (43% and 48%, respectively), in Hunan and Yunnan. Coverage with certificates (at the household level) is almost complete in Guizhou7 and Yunnan, compared to about two thirds in Hunan, suggesting that certificates can be and are awarded even in cases where tenure is of a shorter term nature and redistribution remains a possibility. Village leader as well as mdividual household responses to the question of whether land rental is allowed or not points towards considerable divergence between official policy and household perception but at the same time also suggest that the "two nos" policy is neither a precondition for -nor even highly correlated to- availability of transfer rights. Surprisingly, the share of villages where land rental is officially allowed is highest in Hunan, even though this is the province with the least amount of penetration of certification and the "two nos" policy. According to village leader responses, the percentage of villages allowing land rental ranges from between almost 80% for Hunan to 39% for Yunnan. Villagers' views are quite different, suggesting that households may be less aware of existing restrictions on land rental than village leaders assume or that these rules are either difficult to enforce or not recognized. While villagers' relative ranking of provinces is consistent with the information given by village leaders, the share of households who believe that rental is allowed is, with 90%, much higher than what has been indicated by leaders. To obtain information on preferences for land rights, the survey also asked households to rank 4 types of land policies in descending order. The first is the "two nos" policy, i.e. no readjustment m response to either population increase or decrease together with an enhanced duration of land rights of at least 30 years. The second option is a policy of continuing "small adjustments", i.e. administrative reallocation of land from households who experienced population decrease to those whose population increased while leaving others' land endowments unchanged. The third option is a "large adjustment" policy whereby land is completely redistributed among all households m the village based on population size every 3 to 5 years. The final policy option is one of a "big adjustment followed by a 7 Following provincial policy, certificates held by villagers in Guizhou specify a contract term that extends from 1994 to 2043, i e. exactly 50 years The reason for back-dating contracts to 1994 is that this was the year in which the first round of 15-year contracts following the adoption of the HRS in 1979 was supposed to have ended, despite the fact that, as is evident from our survey, most villages completed the initial round of land allocations only in the early to mid 1 980s 10  two no policy" where land is redistributed to establish an egalitarian landholding structure before imposing the "two nos" policy and longer-term tenure security.8 Descriptive evidence on farmers' first preferences indicates that there is indeed considerable support for the policy of "two nos". Either immediate imposition of the "two nos" policy or implementation of a large adjustment that is then followed by the "two nos" policy is supported by about two thirds of households in Guizhou (68%) and Yunnan (64%) but only 42% in Hunan. Most of the households (45% in Guizhou and 43% in Yunnan) prefer to have the "two nos" directly, without going through a redistribution beforehand. Continuing large adjustments, arguably the policy that undermines property rights the most, is preferred only by a very small minority of households (7% in Guizhou, 14% and 13% in Hunan and Yunnan) while small adjustments are the first preference of between one fourth (24% in Guizhou; 28% in Yunnan) to almost one half (44% in Hunan). To assess the policy relevance of these figures it is important to assess the extent to which they might be nationally representative. The nation-wide study by Schwarzwalder et al. (2001) broadly supports our findings for the provinces where there is an overlap (72%, 63% and 67% of households m Guizhou, Yunnan, and Hunan who do not oppose a policy of "two nos") and, in addition, points towards a high level of support for stable land distribution nation-wide, though this support is slightly higher in poor provinces. Interestingly, even though this survey finds that support for the "two no" policy was slightly higher in Guizhou than in other provinces, this study finds that support for such a policy in Guizhou is only about 10% higher than the average for the eight poorest provinces (Guizhou, Yunnan, Hunan, Jiangxi, Jlim, Heilongjiang, Guangxi, and Shaanxi), clearly too little to argue that this policy might have been imposed endogenously in Guizhou. While definitions are slightly different, this is at variance with an earlier study by Kung and Liu (1997) who, based on a smaller and geographically more concentrated sample, found 62%of households to be in favor of periodic redistnbution. Exploring the methodological and substantive reasons underlying such differences in more detail would be an important area for future research.9 3.4 Investment, shocks, and coping strategies To gain insight into how exogenous land right arrangements affect households' choice of asset portfolio, we distinguish between investments in agriculture, education, and non-agricultural enterprises. Table 4 illustrates that the most frequent type of investment is in consumer durables, 8 Prosterman et al (2000) claim that such a policy has significant support in many rural areas of China 9 A study of Meitan, the county where the onginal policy expenment had been conducted (Kung forthcoming), finds evidence for a significant decline in support for a policy of no reallocation and a level of support for a policy of no readjustment which, with about 32%, at present, is less than half of what emerges from our survey This draws attention to the fact that changes in the property nghts regime will have distnbutonal implications in addition to their impact on efficiency Differences in sampling are a pnme candidate for such vanation in results To the extent that our sample is a true random sample of the population in the provinces to be covered (as compared to only one county in the case of Kung), we are reasonably confident with respect to the accuracy of the numbers obtained. 11  especially housing, followed by investment in agricultural enterprises (including land) and non- agricultural enterprise assets. About one third of the households included in the sample (36% in Hunan, 33% in Guizhou, and 24% in Yunnan) undertook agricultural investment during the 5 years before the survey (i.e. from 1996-2001), compared to about two thirds in all provinces who invested in consumer goods and housing. Two other strategies to increase income in the future are investment in children's education and out-migration. The data show slight differences in education of the most recent group of children graduating from primary school (i.e. those between 15 and 20 years of age m 2000), with the highest values attained in Hunan, followed by Guizhou and Yunnan (5.5, 5.8 and 4.9 years, respectively). Regarding current migration, one observes significant differences between household heads and children. Migration is highest in Hunan. One of the most important reasons for households to disinvest or to reduce their equilibnum holding of durable assets is either in response to or in anticipation of shocks, given the type of safety nets available. To the extent that differences in land rights arrangements imply a systematic change in the possibilities to smooth consumption in response to population-related shocks, one would expect households' optimum portfolio to adjust both ex ante (i.e. irrespectively of whether a shock was actually experienced, depending only on the specific land right arrangements) as well as ex post for those households who experienced a shock. To provide a first indication of the extent to which we would expect changes in land rights to have an impact on the ability to deal with risk, we need to hold constant for other factors, in particular the strength of the borrowing network and whether or not respondees experienced an actual shock. To approximate the former in an environment where access to formal credit is restricted,l' interviewees were asked about the number of people from whom they could borrow amounts ranging from Y 1,000 to Y 10,000."1 For the latter, information was gathered on whether, during the last 5 years, households had experienced any of a number of shocks,'2 the approximate magnitude of the shock in monetary terms, and the coping strategy adopted to deal with the situation. Table 4 contains descriptive statistics for both variables. The average household had 2.1 friends who could be approached in order to borrow amounts between Y 1,000 and Y 5,000, with significant differences between Guizhou where this figure was highest (2.4) and Hunan and Yunna (1.7). Responses to small shocks involving a loss of between Y 1,000 and 5,000 and large shocks, defined as i