Are they satisfied with land taking? Aspects on procedural fairness, monetary compensation and behavioral simulation in China's land expropriation story

Abstract

Farmland expropriation and the associated satisfaction or otherwise of farmers has been receiving increased attention under the background of China's rapid urbanization. We use a literature review to identify specific gaps that need to be filled: (1) where and how the satisfaction of land expropriation comes from? (2) how to effectively measure the level of satisfaction? The evaluation of satisfaction is considered to come from three stages of pre, during and post expropriation. This paper aims to examine two groups of land-taken and land-kept farmers by using the binary nonlinear model, logit and order-Probit regression, blinder-Oaxaca decomposition and Heckman two-step selection as the data analysis method. Two research questions are raised in an extended Institutional Analysis and Development (IAD) framework, including: 1) which factors mostly affect farmer's willingness and satisfaction in the IAD framework? and 2) what is the marginal effect of different factors, especially of the interaction between land compensation standards and the openness and fairness of expropriation procedures? The four main results indicate that, firstly, improvement in the compensation criterion is helpful for improving the level of satisfaction, but does not mean that higher compensation is better, because empirical research indicates that simply increasing the amount of compensation does not significantly increase satisfaction unless the farmers are consulted over the land-acquisition procedures and compensation amounts. Second, the most important aspect for the farmers is how much their income level increases, ‘inequality rather than want is the cause of trouble’ and, in the absence of any consultation, ‘waiting for the right place to sell' in the next round. Third, compensation should be allocated to the farmer instead of the rural collective. Fourth, according to the theories of resource endowment and reference dependence, to explicate the negative effect between the strength and perception of property rights, it is considered that the inter-relationship between land ownership and farmland circulation is uncertain. Whether the influence is positive or negative mostly depends on the strength of the property rights, institutional environment, behavioral cognitive ability and the capability to implement or act.