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Land tenure, population, and long-run growth

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Abstract

This paper brings together the development literature on land tenure with current research on population and long-run growth. Landowners make a decision between fixed rent, fixed wage, and sharecropping contracts to hire tenants to operate their land. The choice of tenure contract affects the share of output going to tenants, and within a simple unified growth model, this affects the relative price of food and therefore fertility. Fixed wage contracts elicit the lowest fertility rate and fixed rent contracts the highest, with sharecropping as an intermediate case. The implications of this for long-run growth depend on the assumptions one makes about scale effects in the aggregate economy. With increasing returns to scale, as in several models of innovation, fixed rent contracts imply higher growth through a market size effect. Without such increasing returns, though, fixed rent contracts reduce output per capita through a depressing effect on accumulation.

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Notes

  1. This review is incredibly incomplete. The reader is referred to Otsuka et al. (1992) for a broader description of the literature.

  2. The focus on the relative cost of children in determining outcomes is shared with work by Galor and Mountford (2008) and Moav (2005).

  3. Sharecropping is shown to be an intermediate case between these two extremes.

  4. While showing the potential impact of land tenure on long-run development, the issue of property rights is not addressed. Landowners do not exert any market power that allows them to capture more than the marginal return to land. Binswanger et al. (1995) discuss historical situations in which greater rents were available though control of labor and credit markets, a situation formalized by Conning (2002) in his examination of land markets when owners act as oligopolists. Similarly, the potential for population density to influence the technology available and hence the tenure system employed, as in Boserup (1965), is not addressed.

  5. Note that there is nothing restricting landowners from being hired-in as the physical labor in this tenure system or any other. The differences arise only from whether management and supervision effort are open activities to non-owners. In the fixed wage contract, non-owners do not provide these services.

  6. Throughout this section, it is assumed that the number of landowners satisfies N/L ≥ θ(βϵ + δ)/w, which assures that the solutions for M and S are all interior and satisfy the condition that M + S ≤ 1. This ensures that it is feasible for a single owner (or tenant) to provide the optimal management and supervision input.

  7. This equilibrium condition is identical for landowners, who recall are able to provide their labor as tenants as well. The difference between non-owners and owners is that owners have additional income depending on the tenure system. The marginal condition relating the return to tenancy and the outside option, though, is identical.

  8. Note that while L A captures the number of tenants, it does not necessarily capture the total amount of labor (physical plus supervision plus management) engaged in agriculture.

  9. This simplifies the analysis without making any qualitative changes.

  10. Note that because labor moves freely between sectors, L Mt /L t is the optimal allocation of labor to manufacturing. By the envelope theorem, we do not need to take into account the effect of a change in fertility on L Mt /L t .

  11. I focus here on non-agricultural productivity because this will drive output per capita in the long run. Increases in agricultural productivity will only increase the long-run size of population.

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  1. University of Houston, 201C McElhinney Hall, Houston, TX, 77204, USA

    Dietrich Vollrath

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Correspondence to Dietrich Vollrath.

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Responsible editor: Alessandro Cigno

I would like to thank David Lagakos, Nico Voigtländer, and an anonymous referee for their suggestions. All errors remain my own.

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Vollrath, D. Land tenure, population, and long-run growth. J Popul Econ 25, 833–852 (2012). https://doi.org/10.1007/s00148-010-0339-3

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