DP4410 Robin Hood's Compromise: Land Reforms, Inequality, Redistribution and Moral Hazard

Author(s): Oriana Bandiera, Gilat Levy
Publication Date: June 2004
Keyword(s): inequality, land reforms, moral hazard, redistribution
JEL(s): D30, D82
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=4410

This Paper analyses an unusually conservative type of redistribution. We take land from the very rich, as usual, but give it to the rich instead of the poor. We show that this type of reform reduces agency costs, thus increasing productivity, total surplus in the economy, and workers? welfare. Compared to the classic redistribution ?to the tiller? it does worse in terms of equity and does not give the poor a collaterizable asset but it is likely to be more sustainable, both economically and politically.