Long-Run Impacts of Land Regulation: Evidence from Tenancy Reform in India

51 Pages Posted: 27 Aug 2015

See all articles by Timothy J. Besley

Timothy J. Besley

London School of Economics & Political Science (LSE) - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Jessica Leight

Williams College

Rohini Pande

Yale University - Economic Growth Center

Vijayendra Rao

World Bank - Development Research Group (DECRG)

Date Written: August 2015

Abstract

Agricultural tenancy reforms have been widely enacted, but evidence on their long-run impact remains limited. In this paper, we provide such evidence by exploiting the quasi-random assignment of linguistically similar areas to different South Indian states that subsequently varied in tenancy regulation policies. Given imperfect credit markets, the impact of tenancy reform should vary by household wealth status, allowing us to exploit historic caste-based variation in landownership. Thirty years after the reforms, land inequality is lower in areas that saw greater intensity of tenancy reform, but the impact differs across caste groups. Tenancy reforms increase own-cultivation among middle-caste households, but render low-caste households more likely to work as daily agricultural laborers. At the same time, agricultural wages increase. These results are consistent with tenancy regulations increasing land sales to relatively richer and more productive middle-caste tenants, but reducing land access for poorer low-caste tenants.

Keywords: inequality, Land reform, long-run impact of institutions

JEL Classification: H73, O12, Q15

Suggested Citation

Besley, Timothy J. and Leight, Jessica and Pande, Rohini and Rao, Vijayendra, Long-Run Impacts of Land Regulation: Evidence from Tenancy Reform in India (August 2015). CEPR Discussion Paper No. DP10780. Available at SSRN: https://ssrn.com/abstract=2652150

Timothy J. Besley (Contact Author)

London School of Economics & Political Science (LSE) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

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Jessica Leight

Williams College ( email )

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Rohini Pande

Yale University - Economic Growth Center ( email )

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Vijayendra Rao

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

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