Land Reform in the Presence of Monitoring Costs and International Trade
REVIEW OF INTERNATIONAL ECONOMICS, October 17, 1996
Posted: 22 Nov 1996
This paper elucidates the implications of transaction costs in agrarian labor hiring activities in a two-sector model of international trade and identifies a link between the size distribution of land and intersectoral allocation of productive inputs. Ceteris paribus, a more unequal distribution of land increases the amount of out-migration from agriculture, a shrinkage of the production possibilityset and a decrease (increase) in the volume of trade if and only if agriculture is the exportable (importable) sector. In addition, non-intervention in factor and commodity markets is constrained optimal only when land redistribution is not a feasible policy option.
JEL Classification: F11, J23, J41, J43, O15, Q15
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