Skip to main content

Land tenure, population, and long-run growth

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.

This is a preview of subscription content, access via your institution.

Fig. 1

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.

References

  • Binswanger H, Deininger K (1997) Explaining agricultural and agrarian policies in developing countries. J Econ Lit 35(4):1958–2005

    Google Scholar 

  • Binswanger H, Deininger K, Feder G (1995) Power, distortions, revolt, and reform in agricultural land relations. In: Behrman J, Srinivasan T (eds) Handbook of development economics. Elsevier Science, Amsterdam, pp 2659–2772

    Google Scholar 

  • Boserup E (1965) The conditions of agricultural growth. Earthscan, London

    Google Scholar 

  • Caselli F (2005) Accounting for cross-country income differences. In: Aghion P, Durlauf S (eds) Handbook of economic growth. Elsevier Science, Amsterdam, pp 679–741

    Chapter  Google Scholar 

  • Cheung, S (1969) The theory of share tenancy. University of Chicago Press, Chicago

    Google Scholar 

  • Conning, J (2002) Latifundia economics. Working paper 02/1, Hunter College Department of Economics

  • Doepke, M (2004) Accounting for fertility decline during the transition to growth. J Econ Growth 9(3):347–383

    Article  Google Scholar 

  • Easterly, W (2007) Inequality does cause underdevelopment. J Dev Econ 84(2):755–776

    Article  Google Scholar 

  • Engerman S, Sokoloff K (1997) Factor endowments, institutions, and differential growth paths among new world economies. In: Haber S (ed) How Latin America fell behind. Stanford University Press, Stanford, pp 260–304

    Google Scholar 

  • Eswaran M, Kotwal A (1985) A theory of contractual structure in agriculture. Am Econ Rev 75(1):162–177

    Google Scholar 

  • Galor O (2005) From stagnation to growth: unified growth theory. In: Aghion P, Durlauf S (eds) Handbook of economic growth. Elsevier Science, Amsterdam, pp 171–293

    Chapter  Google Scholar 

  • Galor O, Moav O (2002) Natural selection and the origin of economic growth. Q J Econ 117(4):1133–1191

    Article  Google Scholar 

  • Galor O, Moav O, Vollrath D (2009) Inequality in landownership, the emergence of human-capital promoting institutions, and the great divergence. Rev Econ Stud 76(1):143–179

    Article  Google Scholar 

  • Galor O, Mountford A (2008) Trading population for productivity: theory and evidence. Rev Econ Stud 75(4):1143–1179

    Article  Google Scholar 

  • Galor O, Weil D (1999) From Malthusian stagnation to modern growth. Am Econ Rev Pap Proc 89(2):150–154

    Article  Google Scholar 

  • Galor O, Weil D (2000) Population, technology, and growth: from Malthusian stagnation to the demographic transition and beyond. Am Econ Rev 90(4):806–828

    Article  Google Scholar 

  • Gollin D, Parente S, Rogerson R (2007) The food problem and the evolution of international income levels. J Monet Econ 54(4):1230–1255

    Article  Google Scholar 

  • Hall R, Jones CI (1999) Why do some countries produce so much more output per worker than others? Q J Econ 114(1):83–116

    Article  Google Scholar 

  • Hansen GD, Prescott EC (2002) Malthus to Solow. Am Econ Rev 92(4):1205–1217

    Article  Google Scholar 

  • Jones CI (2001) Was an industrial revolution inevitable? Economic growth over the very long run. Adv Macroecon 1(2):1–43

    Google Scholar 

  • Jones CI (2003) Population and ideas: a theory of endogenous growth. In: Agion P, Frydman R, Stiglitz J, Woodford M (eds) Knowledge, information, and expectations in modern macroeconomics: in honor of Edmund S. Phelps. Princeton University Press, Princeton, pp 498–521

    Google Scholar 

  • Jones CI (2005) Growth and ideas. In: Aghion P, Durlauf S (eds) Handbook of economic growth. Elsevier Science, Amsterdam, pp 1063–1111

    Chapter  Google Scholar 

  • Klenow P, Rodriguez-Clare A (1997) The neoclassical revival in growth economics: has it gone too far? In: Bernanke B, Rotemberg J (eds) NBER macroeconomics annual. MIT, Cambridge, pp 73–114

    Google Scholar 

  • Kogel T, Prskawetz A (2001) Agricultural productivity growth and escape from the Malthusian regime. J Econ Growth 6(4):337–357

    Article  Google Scholar 

  • Kremer M (1993) Population growth and technological change: 1000000 B.C. to 1990. Q J Econ 108(3):681–716

    Article  Google Scholar 

  • Marshall A (1920) Principles of economics, 8th edn. Macmillan, London

    Google Scholar 

  • Moav O (2005) Cheap children and the persistence of poverty. Econ J 115(500):88–110

    Article  Google Scholar 

  • Newberry DMG (1977) Risk-sharing, sharecropping, and uncertain labour markets. Rev Econ Stud 44(3):585–594

    Article  Google Scholar 

  • Otsuka K, Chuma H, Hayami Y (1992) Land and labor contracts in agrarian economies: theories and fats. J Econ Lit 30(4):1965–2018

    Google Scholar 

  • Restuccia D, Yang D, Zhu X (2008) Agriculture and aggregate productivity: a quantitative cross-country analysis. J Monet Econ 55(2):234–250

    Article  Google Scholar 

  • Stiglitz J (1974) Incentives and risks in sharecropping. Rev Econ Stud 41(2):219–255

    Article  Google Scholar 

  • Strulik H, Weisdorf J (2008) Population, food, and knowledge: a simple unified growth theory. J Econ Growth 13(3):195–216

    Article  Google Scholar 

  • Timmer CP (1988) The agricultural transformation. In: Chenery H, Srinivasan TN (eds) Handbook of development economics, vol I. Elsevier Science, Amsterdam, pp 275–331

    Chapter  Google Scholar 

  • Vollrath D (2009) The dual economy in long-run development. J Econ Growth 14(4):287–312

    Article  Google Scholar 

  • Vollrath D (2010) The agricultural basis of comparative development. University of Houston Working Paper

  • Weisdorf J (2008) Malthus revisited: fertility decision-making based on quasi-linear preferences. Econ Lett 99(1):127–130

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Dietrich Vollrath.

Additional information

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.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

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

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s00148-010-0339-3

Keywords

  • Agriculture
  • Land tenure
  • Endogenous fertility

JEL Classification

  • N10
  • O41
  • Q10