The Welfare Effects of Land Reform: Lessons from Yunnan, China

Land reform has been perceived to be a major avenue for poverty reduction, amid controversies regarding the impacts of land reform in developing economies. This paper demonstrates how China’s land reform in the 1950s succeeded in reducing hunger and poverty. To be more specific, our paper constructs a theoretical model, deriving hypotheses with respect to the welfare effects of land reform in general. The hypotheses are then empirically tested using a unique data set from China. Our identification strategy of combining propensity score matching (PSM) with Differences-in-Differences (DID) estimations ensures the reliability of causal inferences and analytical results. The paper concludes that China’s land reform in the 1950s significantly improved the welfare of peasants in terms of subsistence living while its effect on non-subsistence welfare was insignificant.