The Evolution Of Rule Of Law From The Perspective Of Land System Reform And Its Influence On Entrepreneurship

Since the forty years' opening-up and reforms,China has achieved sustained and rapid economic growth.At the same time,China's socialist legal system has also made great achievements.Our party proposed that we should govern the country according to law and build a socialist country under the rule of law in 1997.After that China's construction of rule of law is in a new stage,which is more important to the economy and society.Nevertheless,the traditional study holds the view that the rule of law doesn't play a key role in China's development.To verify the importance of the rule of law in China's development,we firstly review the literature about how the rule of law matters,and then describe the stylized facts in China's rule of law.We find that the rule of law in China has developed rapidly,but there are obvious differences between regions.However,the current study pays little attention to the regional differences and reasons for the development of rule of law,and also lacks the rigorous discussions on the impact of the rule of law.So in this paper we analyze the possible reasons for the development of rule of law in China from the perspective of land provision of local governments,and test how land reform has a impact on the rule of law and people's preference for redistribution by micro data.We also discuss how the rule of law affects entrepreneurship with census data.Our findings are as follows:Firstly,the land provision of local governments induced by land marketization is one of the reasons for the development of the rule of law.Through the analysis of mechanism,this paper finds that the greater the land provision of local governments,the more heavily the economic growth and financial revenues depending on the land,the greater the marginal benefits of the rule of law to the local governments.And the local government has a great incentive to build the rule of law for increasing the legal capacity.On the other hand,the land provision of local governments also make people have more trust on courts.Then this paper collects the data of the development of the rule of law at the prefecture-level.And by using continuous difference-to-difference model,we find that the land provision of the local government induced by land marketization is positively related to the development of the rule of law.We also find that the improvement of the rule of law is reflected in the promotion of legal capacity,the improvement of the enforcement of the contracts,the strengthening of the transparency and the popularization of policies and regulations,the more perfection of regulations and legislation through using the Urban Competition Index.Finally the main mechanism of the land provision affecting the rule of law is to increase the judicial expenditure.On the other hand,the reform of land provision makes the public have more trust in the local courts by using Civic Awareness Survey.Secondly,the land revolution has a positive effect on people's trust in party and government and has a higher support on redistribution policy of government,which is very important for social output.We find that the land revolution has a long-run influence on people's preference for redistribution by using Civic Awareness Survey.The positive effects still exist after controlling multidimensional fixed effects,party membership,family background,altruism,and religious beliefs.We further find that the land revolution enhances the preference for redistribution in rural areas and immigrants have no effects on our results.To avoid the omitted variable bias,we choose terrains and other factors which could be considered in setting up revolutionary base,constructing an instrumental variable by principal component analysis.The results of two-stage estimation verify the long-run effects of the land revolution.We also find that the land revolution has a long-run effect on trust on central party,government and judiciary through which has a positive effect on people's preference for redistribution.And a higher trust on government and judiciary imply that people have more trust on legal system which is beneficial for the development of rule of law.Thirdly,the rule of law has a positive effect on entrepreneurship.The empirical study using census data shows that the improvement of the rule of law helps to improve the probability of entrepreneurship for family.We further find that the positive effects are more larger when the head of a household are male and there are only boys in family,and the probability of entrepreneurship is higher in urban family.The panel data analysis shows that the rule of law has a significantly positive effect on the urban innovation index.From the perspective of mechanisms,the improvement of the rule of law makes individuals more adventurous and increases the probability of participating in the financial activities.The improvement of the rule of law has also increased the probability of career transitions,and the probability of turning from employee to employers.At last,the rule of law has encouraged the families to hire more workers outside the family,rending family members working outside home and raise the probability of getting loans from banks.This paper shows the reasons for the development of rule of law in China and the effects brought by the rule of law.As our country enters a new normal state,the development model of local economy is transforming to the high quality of development,the past model depending on the land has been gradually adjusted.The analysis of this article means that the incentive of the construction of the rule of law by the local government will be reduced.Therefore,it is necessary to reform the guarantee system of funds of the judicial system.And the socialist rule of law can continue to develop only when we completely change the structure of funds in the past times.With the improvement of the rule of law,the financing of families will be more convenient,and the possibility of innovation and entrepreneurship will also increase significantly,which is conducive to the long run economic growth of our country.