Property Rights for the Poor: Effects of Land Titling

Secure property rights are considered a key determinant of economic development. The evaluation of the causal effects of land titling, however, is a difficult task as the allocation of property rights is typically endogenous. We exploit a natural experiment in the allocation of land titles to overcome this identification problem. More than twenty years ago, a group of squatters occupied a piece of land in a poor suburban area of Buenos Aires. When the Congress passed a law expropriating the land from the former owners with the purpose of entitling it to the occupants, some of the original owners accepted the government compensation, while others are still disputing the compensation payment in the slow Argentine courts. These different decisions by the former owners generated an allocation of property rights that is exogenous in equations describing the behavior of the squatters. We find that entitled families increased housing investment, reduced household size, and improved the education of their children relative to the control group. However, effects on credit access are modest and there are no effects on labor income.