DP10780 Long-Run Impacts of Land Regulation: Evidence from Tenancy Reform in India

Author(s): Timothy J. Besley, Jessica Leight, Rohini Pande, Vijayendra Rao
Publication Date: August 2015
Keyword(s): inequality, Land reform, long-run impact of institutions
JEL(s): H73, O12, Q15
Programme Areas: Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=10780

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.