reject the hypothesis of zero reform effects on the likelihood of a land reallocation. At the same time, the reallocation-reducing effect of reforms is much higher for those closer to Chengdu; for those within the boundary, a travel distance of one hour would imply a point estimate of reform effects of 11%.

# **4.2 Changes in land use**

Beyond encouraging higher levels of land-attached investment, tenure security is also a pre-condition for decentralized land transfers that can increase overall efficiency by better aligning land use with economic incentives (Besley and Ghatak 2010). To check if Chengdu’s reforms may have triggered such change, table 4presents results from regressions of the share of land in a village under different uses, in particular (i) arable agriculture vs. other less directly productive uses; (ii) non-residential compared to residential construction land; and (iii) unutilized or so-called wasteland. Results point towards no appreciable impact on the share of unutilized or ‘waste’ land, allaying fears that reforms may have led to unsustainable land expansion or deforestation but considerable changes within the agricultural and construction land categories.

For agricultural land, we find evidence of intensification of agricultural land use with a highly significant reform-induced increase of 2.5% in the share of land used for agriculture that is matched by a reforminduced decrease of almost equal magnitude (-2.2%) in the share of ‘other’ agricultural land. The placebo test illustrates that estimated reform impacts contrast with pre-reform trends (i.e. insignificant trend or a significant increase for arable and ‘other’ rural land, respectively), suggesting that, if anything, reforms reversed an earlier increase in ‘other’ agricultural land, helping to bring such land to more productive use.

A key goal of China’s land policy has been to create incentives for bringing unused residential land to more productive use although implementing this has not always been easy or uncontroversial (Huang _et al._ 2014). Our results suggest that reforms led to a significant increase of 1.2 percentage points compared to a prereform mean of 3.9% in the share of non-residential construction land (table 4, panel A, column 4). This is matched by an almost equivalent decrease (a point estimate of 0.9%) in the share of residential construction land,<sup>14</sup> supporting the interpretation that it was creation of a more conducive environment for operation of land as well as labor markets that allowed the land freed up in this way to be formalized to allow its effective use in a way that is sanctioned by the law. We will explore below the extent to which construction land conversion to non-residential use created employment opportunities.

One of the advantages of village level data is the presence of considerable variation in terms of distances to the city that can be exploited by allowing the size of reform effects to vary with this variable. Estimates that do so suggest that reform-related increases in the share of arable agricultural land compared to the

> 14 While placebo tests point towards some reduction of residential land in Chengdu even before the reform -though of much smaller magnitude than after the reform, no such trend is evident for non-residential construction land.

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