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Specificity of Control: The Case of Mexico's Ejido Reform

  • Paul Castãneda Dower

    ()

    (New Economic School)

  • Tobias Pfutze

    ()

    (Oberlin College)

An important aspect of property rights is specificity, the ability of a third party to enforce rights. The empirical literature rarely isolates the effect of specificity because exogenous changes, due to land reforms, either simultaneously change both control and specificity or exclusively change control. We investigate the effect of specificity in the context of the 1992 Salinas land reforms in Mexico, which constitutionally changed individual control rights for all communal landholders but reserved changes to specificity for a subsequent voluntary land certification program. We are able to address selection into the program by taking advantage of the peculiarities in the certification process. Using agricultural production data from before and after the reform, we demonstrate that land certification significantly increases agricultural investments but only for investments directly affected by the changes in control. We explain the results using a simple model that shows how specificity can better coordinate landholders' beliefs about the implementation of changes in control.

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Paper provided by Center for Economic and Financial Research (CEFIR) in its series Working Papers with number w0188.

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Length: 54 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:cfr:cefirw:w0188
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