Human Capital and the Agrarian Structure in Transition: Micro-Evidence from Romania

Abstract

This article examines determinants of the agrarian structure in transition economies with an emphasis on the role of rural households’ human capital. Land reform and enterprise restructuring have resulted in a broad range of farm types, such as cooperatives, partnerships, individual farms and combinations of these. In the theoretical model the fact that household resources are allocated to different organization modes is attributed to the utility maximization strategy of heterogeneous agents deriving income from uncertain sources in the face of incomplete factor markets. The empirical results from a multinomial logit model estimated with data from a two-year nationwide survey of Romanian rural households support the hypothesis that the current agrarian structure is importantly affected by the human capital characteristics of the households and the economic risks they face.