The effects of land titling on intergenerational transfers in rural China

Abstract

The motives behind transfers from adult children to parents hold significance in the well-being of the elderly. In the context of China’s land titling program, we utilize a dominant child model to study the trade-off between altruism and exchange motives. Based on data from the China Health and Retirement Longitudinal Study, this paper employs the endogenous switching model to investigate the effects of land titling on children’s pecuniary and time transfers. The results of the average treatment effect on the treated (ATT) indicate that for children whose parents receive land titling, land titling has significantly increased their pecuniary transfers while decreasing their time transfers. Mechanism analysis reveals that the land titling program results in higher parental income by incentivizing parents to rent out their land and engage in off-farm employment. These findings reveal the exchange motive, suggesting that children provide transfers out of concern about their parents’ wealth. Heterogeneous analysis demonstrates that both sons and daughters lean towards exchange motives. Land titling effects are pronounced among children without siblings, those from parental households with lower land per capita, and those with higher income.