Wealth redistribution in urban land development under a dual land system: A case study of Beijing

Abstract

This paper studies rural land value appreciation and the wealth redistribution effects of China's dual land system, taking Beijing as a case study. We propose a robust method to estimate the land value gap between the land granting price paid by the developer and the rural resident's compensation for the expropriated land. The study shows that the land value gap manifests dramatic variability. While, on average, expropriation charges amount to 15 per cent of the estimated market value of land, this share is under 5 per cent in about a quarter of all rural expropriation cases. The land value gap shows significant and positive correlation with market prices and the intended use for the land, and significant evidence of spatial dependence and heterogeneity.