land Article Research on the Impact of Land Circulation on the Income Gap of Rural Households: Evidence from CHIP Congjia Huo 1 and Lingming Chen 1,2,* 1 Department of Economics, School of Business, Hunan University of Science and Technology (HNUST), Xiantang 411201, China; [email protected] 2 Department of Economics & Statistics, School of Economics and Management, Xinyu University (XYU), Xinyu 338004, China * Correspondence: [email protected]; Tel.: +86-158-7009-2285 Abstract: With the continued development of the economy, the income gap among Chinese rural households continues to widen. The land system plays a decisive role in developing “agriculture, rural areas and farmers” and land circulation is a factor in the increase in income inequality among farm households. Based on the 2013 China Household Income Project (CHIP), this article used the re-centered influence function (RIF) regression method to empirically test the impact of rural land circulation on the income gap of rural households in China in three regions: the central, eastern and western regions. The quantile regression tested the impact mechanism of income inequality of rural households from the perspective of labor mobility and land circulation. The empirical results showed that land circulation increases the income inequality of rural households. The theoretical mechanism test proved that the dynamic relationship between land circulation and labor mobility increases rural household income. However, this increase has a greater effect on rural households with a high Citation: Huo, C.; Chen, L. Research income and a small effect on rural households with a low income, resulting in a further widening of on the Impact of Land Circulation on the income gap. Therefore, while increasing the income of rural households through land circulation, the Income Gap of Rural Households: the government should also consider income equity. Finally, this article puts forward the policies and Evidence from CHIP. Land 2021, 10, opinions on land reform and provides a brief discussion on the future direction of development. 781. https://doi.org/10.3390/ land10080781 Keywords: land circulation; income gap; rural households income; re-centered influence function; quantile regression Academic Editors: Marina Cabral Pinto, Amit Kumar and Munesh Kumar 1. Introduction Received: 27 June 2021 Accepted: 22 July 2021 Since the founding of New China, Chinese farmers have experienced changes in Published: 25 July 2021 farmland, agricultural management and farmland property rights systems. With the implementation of the rural revitalization strategy, the development of urban and rural Publisher’s Note: MDPI stays neutral areas has been coordinated, reforms have been comprehensively deepened, and farmers’ with regard to jurisdictional claims in incomes have continued to increase. However, this increase in income has also been published maps and institutional affil- accompanied by a continuous expansion of the income gap within rural areas. The “Report iations. on the Development of Rural Households in China (2018)” posited that rural household income inequality is rising in China. The Gini coefficient increased from 0.45 in 2011 to 0.535 in 2017, significantly higher than the internationally recognized warning line of 0.4 [1]. Figure1 shows the Gini coefficient and Theil index estimated from quintile data of the per capita disposable income of rural households. These data came from the “China Yearbook Copyright: © 2021 by the authors. Licensee MDPI, Basel, Switzerland. of Household Survey” from 2005–2019. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/). Land 2021, 10, 781. https://doi.org/10.3390/land10080781 https://www.mdpi.com/journal/land Land 2021, 10, 781x FOR PEER REVIEW 2 of 20 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 Theil index The gini coefficient coefficient The gini index Theil 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Year The gini coefficient Theil index FigureFigure 1. 1. TheThe Gini Gini Coefficient Coefficient and and Theil Theil Index Index of of Per Per Capita Capita Disposable Disposable Income Income of of Rural Rural Households Households inin China fromfrom 20052005 toto 2019. 2019. Note: Note: the the data data comes comes from from the the compilation compilation and and calculation calculation of theof the Chinese Chi- neseHousehold Household Survey Survey Yearbook. Yearbook. ItIt can can be be seen from from Figure 11 thatthat thethe GiniGini coefficientcoefficient ofof ruralrural householdhousehold incomeincome hashas risenrisen steadily, steadily, andand thethe GiniGini coefficientscoefficients calculatedcalculated by by quintile quintile subgroups subgroups exceed exceed 0.35, 0.35, with with a ahigher higher rise rise in thein the Theil Theil index. index. In 2019, In 2019, the Gini the coefficientGini coefficient and Theil and index Theil declinedindex declined slightly. slightly.China continues China continues to explore to explore a reform a ofreform the rural of the system, rural system, but the but transformation the transformation of the ofrural the economyrural economy has taken has tootaken long too to long exceed to exceed people’s people’s expectations. expectations. There haveThere been have twists, been twists,stagnations, stagnations, and even and deviations even deviations in the in reform the reform process. process. Although Although this slow this slow economic eco- nomictransformation transformation avoids avoids the risk the of economicrisk of economic and social and disorder, social disorder, it has also it has gained also time gained for timethe formation for the formation and growth and growth of interest of interest groups. groups. With a With lag of a lag political of political reforms, reforms, economic eco- nomictransformation transformation has become has become the eternal the eternal theme theme of “always of “always on the on road”. the road”. This unbalancedThis unbal- ancedtransformation transformation path ispath fully is reflectedfully reflected in the in field the field of income of income distribution. distribution. Although Althou thegh theincome income of ruralof rural households households continues continues to to increase, increase, the the income income gapgap withinwithin ruralrural areas continuescontinues toto widen,widen, asas does does the the income income gap gap between between urban urban and and rural rural areas. areas. There There have have been beenstrange strange phenomena phenomena such such as the as intertwining the intertwining of reasonable of reasonable and unreasonableand unreasonable income income gaps gapsand theand coexistence the coexistence of open of open and transparent and transparent distribution distribution models models and hidden and hidden distribution distri- butionmechanisms. mechanisms. In contrast, In contrast, inequality inequality in rural in areas rural restricts areas restrict economics economic development, development, reduces reducesthe welfare the generatedwelfare generated by increased by increased incomes, incomes, and affects and social affects stability. social stability. ThereThere are are many many reasons reasons for for income income inequality inequality among among rural rural households. households. Existing Existing re- searchresearch mainly mainly explores explores the the physical physical capital, capital, human human capital capital and and social social capital capital owned owned by ruralrural households.households. TheThe landland systemsystem plays plays a a decisive decisive role role in in the the development development of “agriculture,of “agricul- ture,rural rural areas areas and farmers”. and farmers”. The household The household contract contract responsibility responsibility system system was implemented was imple- mentedat the beginning at the beginning of the foundingof the founding of New of China.New China Although. Although it has it greatlyhas greatly increased increased the tenthusiasmhe enthusiasm of households’ of households’ production, production, the governmentthe government strictly strictly prohibits prohibits the sale the ofsale land of landuse rights.use rights. In recentIn recent years, years, the the circulation circulation system system of of land land contract contract rightsrights hashas become increasingly stable, and the government has liberalized the land circulation system. The increasingly stable, and the government has liberalized the land circulation system. The process of urbanization and industrialization has accelerated, many rural laborers have process of urbanization and industrialization has accelerated, many rural laborers have flowed into cities and towns, and the relationship between people and land has been flowed into cities and towns, and the relationship between people and land has been con- continuously adjusted. Figure2 shows the change process of the land circulation scale in tinuously adjusted. Figure 2 shows the change process of the land circulation scale in China from 1984 to 2014. China from 1984 to 2014. Land 2021, 10, 781 3 of 20 Land 2021, 10, x FOR PEER REVIEW 3 of 20 4.5 45.00% 4 40.00% 3.5 35.00% 3 30.00% 2.5 25.00% 2 20.00% 1.5 15.00% 1 10.00% 0.5 5.00% Degree of land circulation(G) of land Degree 0 0.00% Land circulation are(100 million mu) million are(100 circulation Land 1984 1992 2006 2007 2008 2009 2010 2011