Concentration of land holdings: An empirical exploration of Kuznets' conjecture

Abstract

According to Kuznets (1963), the dynamics of the maldistribution process starts from an initial unequal income distribution, then through a cumulative effect, a high concentration of asset holdings is induced which in turn contributes to a high concentration of income. In other words, unequal income distribution tends to be self-perpetuated and unequal asset holdings is a medium of such process. The literature on rural income distribution seems to suggest a different emphasis by assigning a more crucial role to asset holdings, i.e., land, in the explanation of unequal income distribution. This study shows, via a simultaneous equation model and a multi-nation cross-sectional set of data, that both the land and income concentration ratios are positively related. Of the two rival conjectures of emphasis, the empirical evidence lends support in the general case to Kuznets, that is, over the entire range of countries, developed and less-developed, inequality in income seems to cause inequality in land holdings rather than vice-versa In the specific case of less developed countries, it is the high concentration of land holdings that influences the unequal distribution of income.