“Measuring the Effects of Decollectivization on China’s Agricultural Growth: A Panel Instrumental Approach”

Shengmin Sun, Shandong University

Qiang Chen, Shandong University

The mainstream view that decollectivization significantly contributed to China’s agricultural growth has recently been challenged by revisionists, who emphasize the positive effects of the socialist legacy, such as irrigation and mechanization. This study contributes to this debate by explicitly recognizing the endogeneity of institutional changes and exploits exogenous variations in initial fixed assets and lagged weather shocks for identification. With improved data on irrigation, mechanization, weather and institutional changes in a provincial-level dataset for the 1970-1987 period, the results of panel instrumental estimations reveal that the Household Responsibility System (HRS) had a significantly positive effect on China’s agricultural growth, which was larger than indicated by OLS estimates that suffer from adverse selection and attenuation biases.