Research Findings Seminar on "Political Turnover and Land Supply: Evidence from Chinese Cities"

Leasing land contributes significantly to local government financing in China. It accounts for a large share of fiscal revenue. According to the 2016 statistics, the "land-transferring fees" collected by local government arrived RMB 3.74 trillion (approximately $0.55 trillion) and accounted for 28.6% of local governments' fiscal revenue. It is well known that as highest leaders of the administrative region, municipal Secretary and Mayor should have discretion over land supply, but surprisingly, few facts are known about how they lease the land. To better understand their behaviors, we construct two unique and rich datasets in this paper; one contains information on local officials' backgrounds like age, gender, birthplace, term, and another one contains detailed parcel-level transaction information (more than 1.6 million observations) across 331 cities in China between 2004-2015 extracted from landchina.com. We found that local officials sell less land during the later period of office, and this effect only statistically significant for municipal Secretary but not for Mayor. This finding is robust across different econometric specifications. Then we investigate the mechanism of this behavior and document several interesting behavioral patterns. We also examine heterogeneous effects in the end.