Can property rights delineation incentivize farming households’ consumption? An analysis from the perspective of precautionary savings

Property rights system reform is a crucial means to stimulate rural development vitality and facilitate the strategy of rural revitalization. However, there is still insufficient empirical evidence regarding whether property rights delineation can reduce farming households’ precautionary savings and thereby boost their consumption. To address this, this study takes China’s new round of rural land rights confirmation (RLRC) as an example. It constructs a quasi-natural experiment based on data from the 2013 and 2015 China Household Finance Survey (CHFS) and the 2018 China Labor-force Dynamics Survey (CLDS). By comprehensively employing the Difference-in-Differences (DID) method, the Instrumental variable (IV) method, and the Mediation effect model, this study empirically investigates the causal relationship between RLRC and farming households’ consumption, with a particular focus on the mediating effect of precautionary savings. This study finds that the RLRC promotes the growth of farming households’ consumption, and this conclusion remains valid after undergoing various robustness tests. Mechanism analysis reveals that RLRC boosts farming households’ consumption by reducing their precautionary savings, and this mechanism remains robust and effective even after the implementation of the “separation of three rights” reform of rural land and the pilot programs for the mortgage loans of rural land management rights. Heterogeneity analysis indicates that for households with younger household heads and those possessing richer human capital and social capital, the stimulating effect of RLRC on their consumption is more pronounced. Further analysis shows that RLRC primarily promotes subsistence consumption among farming households, rather than developmental consumption, while also having a positive effect on their income improvement. This study not only provides a new explanation for the paradoxical phenomenon of “farming households having money but being reluctant to spend it” but also offers new empirical evidence for government departments to optimize or formulate consumption stimulation policies.