What are the political consequences of government expropriation? And what are the possible economic explanations for these consequences? By using land expropriation in China frequently implemented by local governments as a natural experiment, this paper employs a generalized difference-in-differences approach to study the political consequences of extractive institutions. The empirical results show that exposure to land expropriation decreases individuals' trust towards local government officials by about 11 percent of a standard deviation. The effect on political trust is significantly persistent. Exposure to land expropriation increases the probability of having conflicts with local government officials by about 51 percent. The effect on political conflict attenuates to zero...[ Read more ]

What are the political consequences of government expropriation? And what are the possible economic explanations for these consequences? By using land expropriation in China frequently implemented by local governments as a natural experiment, this paper employs a generalized difference-in-differences approach to study the political consequences of extractive institutions. The empirical results show that exposure to land expropriation decreases individuals' trust towards local government officials by about 11 percent of a standard deviation. The effect on political trust is significantly persistent. Exposure to land expropriation increases the probability of having conflicts with local government officials by about 51 percent. The effect on political conflict attenuates to zero about six years after. The heterogeneous analysis shows that the effects on both political outcomes are significant only in corrupt regions. These results could possibly be explained by the low compensation provided by local governments for land expropriation and the negative impacts of land expropriation on household welfare. My findings have implications for political inference in China.

Keywords: Land Expropriation; Political Trust; Political Conflict

JEL Codes: D74, D78, H79, O38, P26