General Equilibrium Effects of Land Market Restrictions on Labor Market: Evidence from Wages in Sri Lanka

46 Pages Posted: 18 Aug 2010 Last revised: 7 May 2013

See all articles by M. Shahe Emran

M. Shahe Emran

George Washington University - Department of Economics

Forhad Shilpi

World Bank - Development Research Group (DECRG)

Multiple version iconThere are 2 versions of this paper

Date Written: May 7, 2013

Abstract

Taking advantage of a historical quasi-experiment in Sri Lanka, this paper provides evidence on the effects of land market restrictions on equilibrium wage and its spatial pattern. For identification, we exploit the effects of historical malaria prevalence on the incidence of land restrictions through the availability of `crown land'. The results indicate important spatial heterogeneity in the effects of land restrictions. There is no perceptible effect in the rural areas adjacent to urban areas. The negative effect of land restrictions is strongest in rural areas located within 3.5 hours travel time from large urban centers. The elasticity of wage with respect to land restrictions is -0.186 in this zone.

Keywords: Policy Restrictions in Land Market, Sales Restriction, Rental Restriction, Labor Market, Wages, General Equilibrium Effect, Interaction Effect, Travel Time, Malaria, Sri Lanka

JEL Classification: O10, J31, J61

Suggested Citation

Emran, M. Shahe and Shilpi, Forhad, General Equilibrium Effects of Land Market Restrictions on Labor Market: Evidence from Wages in Sri Lanka (May 7, 2013). Available at SSRN: https://ssrn.com/abstract=1660226 or http://dx.doi.org/10.2139/ssrn.1660226

M. Shahe Emran (Contact Author)

George Washington University - Department of Economics ( email )

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Forhad Shilpi

World Bank - Development Research Group (DECRG) ( email )

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202-522-1151 (Fax)

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