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Latifundia Economics

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Abstract

This paper proposes a simple general equilibrium theory of agrarian production organization to explain the emergence and persistence of latifundia - minifundia type patterns of agrarian production organization such as have prevailed historically in many parts of Latin America. When land ownership is concentrated, the exercise of market power over land can facilitate the exercise of control over labor, as labor supply to landlord estates is affected by peasant access to land. Equilibria may emerge where landlords, behaving as multi-market Cournot oligopolists, inefficiently hoard land to drive up land rentals and corral cheaper labor into their expanding estates. Labor-service tenancy arrangements, similar to those used in practice, emerge as landlords try to price discriminate. These contracts help to restore allocative inefficiency but lead to lower equilibrium peasant wages and welfare. Population growth, differential technical progress on landlord and peasant farms, and other changes in the physical and economic environment are shown to transform equilibrium patterns of agrarian production organization in ways that are consistent with agrarian trajectories observed in late nineteenth century Chile and several other regions and periods. The model also clarifies how agents' incentives to challenge property rights change along with equilibrium agrarian structures (See my more recent closely related paper "On The Causes of Slavery or Serfdom and the Transition to Agrarian Capitalism: Domar Extended.")

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Bibliographic Info

Paper provided by Hunter College: Department of Economics in its series Hunter College Department of Economics Working Papers with number 02/1.

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Length: 40 pages
Date of creation: 2002
Date of revision:
Handle: RePEc:htr:hcecon:02/1

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Keywords: Monoposony; agrarian organization; inequality; tenancy; slavery; serfdom.;

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References

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  1. Cornia, Giovanni Andrea, 1985. "Farm size, land yields and the agricultural production function: An analysis for fifteen developing countries," World Development, Elsevier, vol. 13(4), pages 513-534, April.
  2. MICHAEL R. CARTER & Frederic Zimmerman, 1998. "The Dynamic Cost and Persistence of Asset Inequality in an Agrarian Economy," Wisconsin-Madison Agricultural and Applied Economics Staff Papers 416, Wisconsin-Madison Agricultural and Applied Economics Department.
  3. Kenneth L. Sokoloff & Stanley L. Engerman, 2000. "Institutions, Factor Endowments, and Paths of Development in the New World," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 217-232, Summer.
  4. Nugent, Jeffrey B & Robinson, James A, 2002. "Are Endowments Fate?," CEPR Discussion Papers 3206, C.E.P.R. Discussion Papers.
  5. Dilip Mookherjee, 1995. "Informational Rents and Property Rights in Land," Boston University - Institute for Economic Development 55, Boston University, Institute for Economic Development.
  6. Binswanger, Hans P. & Deininger, Klaus & Feder, Gershon, 1993. "Power, distortions, revolt, and reform in agricultural land relations," Policy Research Working Paper Series 1164, The World Bank.
  7. Hotte, Louis, 2001. "Conflicts over property rights and natural-resource exploitation at the frontier," Journal of Development Economics, Elsevier, vol. 66(1), pages 1-21, October.
  8. Schaffner, Julie Anderson, 1995. "Attached farm labor, limited horizons and servility," Journal of Development Economics, Elsevier, vol. 47(2), pages 241-270, August.
  9. Braverman, Avishay & Stiglitz, Joseph E, 1982. "Sharecropping and the Interlinking of Agrarian Markets," American Economic Review, American Economic Association, vol. 72(4), pages 695-715, September.
  10. Eswaran, Mukesh & Kotwal, Ashok, 1986. "Access to Capital and Agrarian Production Organisation," Economic Journal, Royal Economic Society, vol. 96(382), pages 482-98, June.
  11. Conning, Jonathan H & Robinson, James A, 2002. "Land Reform and the Political Organization of Agriculture," CEPR Discussion Papers 3204, C.E.P.R. Discussion Papers.
  12. McCulloch, Rachel & Yellen, Janet L., 1980. "Factor market monopsony and the allocation of resources," Journal of International Economics, Elsevier, vol. 10(2), pages 237-247, May.
  13. Michael Kevane, 1996. "Agrarian Structure and Agricultural Practice: Typology and Application to Western Sudan," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 236-245.
  14. Baland, Jean-Marie & Robinson, James A, 2003. "Land and Power," CEPR Discussion Papers 3800, C.E.P.R. Discussion Papers.
  15. Feenstra, Robert C., 1980. "Monopsony distortions in an open economy: A theoretical analysis," Journal of International Economics, Elsevier, vol. 10(2), pages 213-235, May.
  16. Sadoulet, Elisabeth, 1992. "Labor-Service Tenancy Contracts in a Latin American Context," American Economic Review, American Economic Association, vol. 82(4), pages 1031-42, September.
  17. James R. Markusen & Arthur J. Robson, 1980. "Simple General Equilibrium and Trade with a Monopsonized Sector," Canadian Journal of Economics, Canadian Economics Association, vol. 13(4), pages 668-82, November.
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Citations

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Cited by:
  1. Jonathan H. Conning & James A. Robinson, 2001. "Land Reform and the Political Organization of Agriculture," Department of Economics Working Papers 2001-10, Department of Economics, Williams College.
  2. Maloney, William F., 2002. "Missed opportunities - innovation and resource-based growth in Latin America," Policy Research Working Paper Series 2935, The World Bank.
  3. World Bank, 2004. "Colombia : Land Policy in Transition," World Bank Other Operational Studies 14351, The World Bank.
  4. Assunção, Juliano Junqueira & Moreira, Humberto Ataíde, 2004. "Land taxes in a Latin American context," Economics Working Papers (Ensaios Economicos da EPGE) 526, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  5. Conning, Jonathan H. & Robinson, James A., 2007. "Property rights and the political organization of agriculture," Journal of Development Economics, Elsevier, vol. 82(2), pages 416-447, March.
  6. Raffaella Castagnini & Klaus Deininger & Maria A. Gonzalez, 2004. "Comparing land reform and land markets in colombia: impacts on equity and efficiency," Policy Research Working Paper Series 3258, The World Bank.
  7. Assuncao, Juliano, 2006. "Land Reform and Landholdings in Brazil," Working Paper Series RP2006/137, World Institute for Development Economic Research (UNU-WIDER).

Lists

This item is featured on the following reading lists or Wikipedia pages:
  1. Latifundium in Wikipedia (English)
  2. Latifundium in Wikipedia (Latin)
  3. Latifundium in Wikipedia (Indonesian)
  4. Латифундија in Wikipedia (Macedonian)
  5. Usor:M0rphzone/Latifundium in Wikipedia (Latin)

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