Uncertain Property Rights and Agricultural Production: Evidence from Post-Gold-Rush California

35 Pages Posted: 28 Feb 2006

See all articles by Karen Clay

Karen Clay

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management; National Bureau of Economic Research (NBER)

Date Written: February 2006

Abstract

This paper uses data from California in 1860, a period in which property rights were uncertain, to investigate the relationship between the certainty of property rights and agricultural production. The negative effect of uncertain property rights on farm values, crop production, and wheat productions was large. For example, crop values for preemptors, who had more uncertain property rights than other farmers, were 22-38 percent lower than other farmers. This is consistent with contemporary discussion of the period, which linked uncertain property rights to low investment in the land and the use of short season crops. Less obviously, the mix of products was also significantly affected. Farmers with less secure property rights produced less as measured by crop value than similar farmers with more secure property rights, but owned similar amounts of livestock, presumably because it was mobile. In aggregate, uncertainty depressed the value of crop output by 13-20 percent. The results have implications for understanding the historical development of agriculture in the United States, since squatting on agricultural land was prevalent throughout the United States, and for understanding agriculture in the Third World, since uncertain property rights in agricultural land are still an issue today.

Keywords: property rights, agricultural production, California

JEL Classification: K11, N31, N51, Q13

Suggested Citation

Clay, Karen B., Uncertain Property Rights and Agricultural Production: Evidence from Post-Gold-Rush California (February 2006). Available at SSRN: https://ssrn.com/abstract=885331 or http://dx.doi.org/10.2139/ssrn.885331

Karen B. Clay (Contact Author)

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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