Inter-Generational Effects of Titling Programs: Physical vs. Human Capital
18 Pages Posted: 24 Jul 2013
Date Written: 2011
Abstract
Human capital investment may be affected by programs aimed at giving legal ownership titles to the occupants of land; these are called "land titling programs". Titling is associated with an income (or wealth) effect as it induces higher expenditure on normal goods like home consumption, education and health services. But there is also a substitution effect: the elimination or reduction of expropriation risk makes investment in the home more attractive and therefore increases the "opportunity cost" of other forms of spending. The net effect on human capital is ambiguous. We present a simple model to illustrate this point and test it using a natural experiment in Uruguay were human capital investment is proxied by education and health investment. Our results confirm that titling favors home investment to the detriment of some dimensions of human capital investment for children of 16 and under.
Keywords: titling, income and substitution effects, intergenerational effects
JEL Classification: K11, P14, Q15
Suggested Citation: Suggested Citation