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Untitled: A Study of Formal and Informal Property Rights in Urban Ecuador

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Author Info
Jean O. Lanjouw
Philip I. Levy

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Abstract

In this paper we explore the substitutability of formal and informal property rights. We analyze new survey data from Ecuador, where households have both formal and informal claims to urban residential property. The latter come from a variety of sources, including the activity of a local boss, or organizer. We first develop a theory of the ability to sell or rent land in which a distinction is drawn between transferable property rights (e.g., title) and non-transferable claims (e.g., length of residence). We use this theory of transactions to show that the increase in price that follows the granting of title may be an overestimate of the households' utility gain. In our empirical work we find that the unconditional effect of granting title is to raise properties' value by 23.5%. However, we also find that informal property rights can substitute effectively for formal property rights, so the marginal effect of titling on the ability to transact and on prices can vary widely among communities and among households within a community. For example, the value of property owned by a newly established household with no adult males can increase by 46% with the acquisition of title. These findings suggest that titling programs should be targeted at young disorganized communities if they are to have much effect.

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Paper provided by Economic Growth Center, Yale University in its series Working Papers with number 788.

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Length: 69 pages
Date of creation: Apr 1998
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Handle: RePEc:egc:wpaper:788

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Migot-Adholla, Shem, et al, 1991. "Indigenous Land Rights Systems in Sub-Saharan Africa: A Constraint on Productivity?," World Bank Economic Review, Oxford University Press, vol. 5(1), pages 155-75, January.
  2. Jimenez, Emmanuel, 1985. "Urban squatting and community organization in developing countries," Journal of Public Economics, Elsevier, vol. 27(1), pages 69-92, June. [Downloadable!] (restricted)
  3. Johnson, Omotunde E G, 1972. "Economic Analysis, The Legal Framework and Land Tenure Systems," Journal of Law & Economics, University of Chicago Press, vol. 15(1), pages 259-76, April.
  4. Jimenez, Emmanuel, 1984. "Tenure Security and Urban Squatting," The Review of Economics and Statistics, MIT Press, vol. 66(4), pages 556-67, November. [Downloadable!] (restricted)
  5. Friedman, Joseph & Jimenez, Emmanuel & Mayo, Stephen K., 1988. "The demand for tenure security in developing countries," Journal of Development Economics, Elsevier, vol. 29(2), pages 185-198, September. [Downloadable!] (restricted)
  6. Besley, Timothy, 1995. "Property Rights and Investment Incentives: Theory and Evidence from Ghana," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 903-37, October. [Downloadable!] (restricted)
  7. Rivers, Douglas & Vuong, Quang H., 1988. "Limited information estimators and exogeneity tests for simultaneous probit models," Journal of Econometrics, Elsevier, vol. 39(3), pages 347-366, November. [Downloadable!] (restricted)
  8. Lee J. Alston & Gary D. Libecap & Robert Schneider, 1996. "The Determinants and Impact of Property Rights: Land Titles on the Brazilian Frontier," NBER Working Papers 5405, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  1. Jan K. Brueckner & Harris Selod, 2008. "A Theory of Urban Squatting and Land-Tenure Formalization in Developing Countries," Working Papers 070816, University of California-Irvine, Department of Economics. [Downloadable!]
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  2. Lall, Somik V. & Suri, Ajay & Deichmann, Uwe, 2005. "Household savings and residential mobility in informal settlements," Policy Research Working Paper Series 3596, The World Bank. [Downloadable!]
  3. Sebastian Galiani & Ernesto Schargrodsky, 2004. "Effects of Land Titling on Child Health," RES Working Papers 3184, Inter-American Development Bank, Research Department. [Downloadable!]
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  4. Ismail OMAR & Djurdjani WARDAYA & Priyono Nugroho DJOJOMARTONO, 2009. "The Role Of Land Rights In Urban Heritage Management – The Explanatory Power Of Institutional Economics Analysis In The Reconstruction Of Cultural Heritage Of Kotagede Yogyakarta, Indonesia’S Post," Cercetari practice si teoretice in managementul urban/Theoretical and Empirical Researches in Urban Management, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 4(1S), pages 60-75, April. [Downloadable!]
  5. Dower, Paul & Potamites, Elizabeth, 2005. "Signaling Credit-Worthiness: Land Titles, Banking Practices and Access to Formal Credit in Indonesia," 2005 Annual meeting, July 24-27, Providence, RI 19120, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  6. Deininger, Klaus & Jin, Songqing & Adenew, Berhanu & Gebre-Selassie, Samuel & Nega, Berhanu, 2003. "Tenure security and land-related investment - evidence from Ethiopia," Policy Research Working Paper Series 2991, The World Bank. [Downloadable!]
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  7. Tilman Brück, 2003. "Land Access, Tenure and Investment in Post-War Northern Mozambique," Discussion Papers of DIW Berlin 358, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  8. Lall, Somik V. & Deichmann, Uwe & Lundberg, Mattias K.A. & Chaudhury, Nazmul, 2002. "Tenure, Divesity, and commitment - community participation for urban service provision," Policy Research Working Paper Series 2862, The World Bank. [Downloadable!]
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  9. Tilman Brück, 2003. "Investment in Land, Tenure Security and Area Farmed in Northern Mozambique," HiCN Working Papers 01, Households in Conflict Network. [Downloadable!]
  10. Fabio Soares & Yuri Soares, 2005. "The Socio-Economic Impact of Favela- Bairro: What do the Data Say?," OVE Working Papers 0805, Inter-American Development Bank, Office of Evaluation and Oversight (OVE). [Downloadable!]
  11. Karen Macours & Alain de Janvry & Elisabeth Sadoulet, 2004. "Insecurity of Property Rights and Matching in the Tenancy Market," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series 992, Department of Agricultural & Resource Economics, UC Berkeley. [Downloadable!]
  12. Jonathan Conning & James A. Robinson, 2005. "Property Rights and the Political Organization of Agriculture," Hunter College Department of Economics Working Papers 405, Hunter College: Department of Economics. [Downloadable!]
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  13. Deininger, Klaus & Ali, Daniel Ayalew & Alemu, Tekie, 2008. "Impacts of land certification on tenure security, investment, and land markets : evidence from Ethiopia," Policy Research Working Paper Series 4764, The World Bank. [Downloadable!]
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