The Regulation of Land Markets: Evidence from Tenancy Reform in India
AbstractWhile the regulation of tenancy arrangements is widespread in the developing world, evidence on how such regulation influences the long-run allocation of land and labor remains limited. To provide such evidence, this paper exploits quasi-random assignment of linguistically similar areas to different South Indian states and historical variation in landownership across social groups. Roughly thirty years after the bulk of tenancy reform occurred, areas that witnessed greater regulation of tenancy have lower land inequality and higher wages and agricultural labor supply. We argue that stricter regulations reduced the rents landowners can extract from tenants and thus increased land sales to relatively richer and more productive middle caste tenants; this is reflected in aggregate productivity gains. At the same time, tenancy regulations reduced landowner willingness to rent, adversely impacting low caste households who lacked access to credit markets. These groups experience greater landlessness, and are more likely to work as agricultural labor.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8736.
Date of creation: Jan 2012
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Find related papers by JEL classification:
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
This paper has been announced in the following NEP Reports:
- NEP-AGR-2012-03-28 (Agricultural Economics)
- NEP-ALL-2012-03-28 (All new papers)
- NEP-DEV-2012-03-28 (Development)
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- Pranab Bardhan & Michael Luca & Dilip Mookherjee & Francisco Pino, 2014.
"Evolution of Land Distribution in West Bengal 1967-2004: Role of Land Reform and Demographic Changes,"
Harvard Business School Working Papers
14-066, Harvard Business School.
- Dilip Mookherjee & Pranab Bardhan & Michael Luca & Francisco Pino, 2010. "Evolution of Land Distribution in West Bengal 1967-2004: Role of Land Reform and Demographic Changes," Boston University - Department of Economics - Working Papers Series WP2010-037, Boston University - Department of Economics.
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