Village democracy and household welfare: evidence from rural China

Village democratization in rural China is found to have profound impacts on many socio-economic aspects, but little is understood as to how welfare impacts may occur through farmers' principal production activities. This study helps to fill this gap by investigating how village democracy affects rural household welfare through these channels, using a unique household survey. The authors first establish a theoretical framework that links democracy to household welfare through changes in production efficiency. Focusing on both agricultural and forest production, they then implement empirical estimation using stochastic production frontier techniques with careful consideration of household heterogeneity in technical efficiency. They find that higher levels of village democracy significantly increase farmers' production efficiency, thereby improving their welfare. To the authors' knowledge, this is the first study on the impacts of democracy on producer welfare using micro-level data.