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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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  • Jonathan Conning, 2002. "Latifundia Economics," Economics Working Paper Archive at Hunter College 02/1, Hunter College Department of Economics.
  • Handle: RePEc:htr:hcecon:02/1
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    References listed on IDEAS

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    1. Eswaran, Mukesh & Kotwal, Ashok, 1986. "Access to Capital and Agrarian Production Organisation," Economic Journal, Royal Economic Society, vol. 96(382), pages 482-498, June.
    2. Baland, Jean-Marie & Robinson, James A, 2003. "Land and Power," CEPR Discussion Papers 3800, C.E.P.R. Discussion Papers.
    3. 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.
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    6. Binswanger, Hans P. & Deininger, Klaus & Feder, Gershon, 1995. "Power, distortions, revolt and reform in agricultural land relations," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 42, pages 2659-2772, Elsevier.
    7. Dilip Mookherjee, 1995. "Informational Rents and Property Rights in Land," Boston University - Institute for Economic Development 55, Boston University, Institute for Economic Development.
    8. 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.
    9. 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.
    10. 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.
    11. 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.
    12. Carter, Michael R. & Zimmerman, Frederick J., 2000. "The dynamic cost and persistence of asset inequality in an agrarian economy," Journal of Development Economics, Elsevier, vol. 63(2), pages 265-302, December.
    13. Schaffner, Julie Anderson, 1995. "Attached farm labor, limited horizons and servility," Journal of Development Economics, Elsevier, vol. 47(2), pages 241-270, August.
    14. Sadoulet, Elisabeth, 1992. "Labor-Service Tenancy Contracts in a Latin American Context," American Economic Review, American Economic Association, vol. 82(4), pages 1031-1042, September.
    15. 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.
    16. 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 668-682, November.
    17. 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.
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    Cited by:

    1. William F. Maloney, 2002. "Missed Opportunities: Innovation and Resource-Based Growth in Latin America," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2002), pages 111-168, August.
    2. Juliano Assunção, 2006. "Land Reform and Landholdings in Brazil," WIDER Working Paper Series RP2006-137, World Institute for Development Economic Research (UNU-WIDER).
    3. 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.
    4. 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.
    5. 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.
    6. Assunção, Juliano Junqueira & Moreira, Humberto Ataíde, 2004. "Land taxes in a Latin American context," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 526, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    7. Gollin, Douglas & Kirchberger, Martina & Lagakos, David, 2021. "Do urban wage premia reflect lower amenities? Evidence from Africa," Journal of Urban Economics, Elsevier, vol. 121(C).
    8. Hermans, Frans L. P. & Chaddad, Fabio R. & Gagalyuk, Taras & Senesi, Sebastian & Balmann, Alfons, 2017. "The emergence and proliferation of agroholdings and mega farms in a global context," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 20(2), April.
    9. Banco Mundial, 2004. "Colombia: Una Polã Tica De Tierras En Transiciã“N," Documentos CEDE 002146, Universidad de los Andes - CEDE.
    10. World Bank, 2004. "Colombia : Land Policy in Transition," World Bank Other Operational Studies 14351, The World Bank.

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    More about this item

    Keywords

    Monoposony; agrarian organization; inequality; tenancy; slavery; serfdom.;
    All these keywords.

    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Латифундија in Wikipedia Macedonian
    2. Latifundium in Wikipedia Latin
    3. Latifundium in Wikipedia Indonesian

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