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Urbanization and land property rights

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  • Cai, Yongyang
  • Selod, Harris
  • Steinbuks, Jevgenijs

Abstract

We analyze the joint dynamics of land property rights and urbanization, a key yet underexplored relation that underpins the process of economic development. Using a dynamic stochastic model of urbanization with endogenous demand for property rights over land use, we demonstrate that the costly provision of those rights may result in both residential informality that can persist over time and suboptimal urbanization whereby cities are too small and insufficiently productive. In developing countries, because land administrations in charge of issuing titles are difficult to reform, achieving the second best may require acceptance of some level of informality in spite of the negative externalities stemming from informal land tenure and informal settlements. This may not be easily implemented as urban elites may favor overall welfare-reducing policies that over-evict informal dwellers.

Suggested Citation

  • Cai, Yongyang & Selod, Harris & Steinbuks, Jevgenijs, 2018. "Urbanization and land property rights," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 246-257.
  • Handle: RePEc:eee:regeco:v:70:y:2018:i:c:p:246-257
    DOI: 10.1016/j.regsciurbeco.2018.04.007
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    More about this item

    Keywords

    Agglomeration effects; Residential informality; Land property rights; Urbanization dynamics;

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P14 - Economic Systems - - Capitalist Systems - - - Property Rights
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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