Is landownership a ladder out of poverty?

Abstract

This paper presents a theoretical analysis of the demo-economic effects of landownership in an agrarian economy facing population pressure. A family production structure with overlapping-generations is considered in which fertility is driven by an old-age security motive and two land property rights regimes coexist. Using the tragedy of the commons hypothesis, the model shows that the lack of landownership may contribute to high fertility, low capital investment and thus low living standards. By internalizing the land dilution effect of fertility, a private land regime lowers the population pressure, stimulates capital investment, and eases the poverty trap. These results cannot be obtained through productivity improvement measures and hold under various income allocation schemes among family members namely altruistic, perfectly competitive and egalitarian. The simulated joint behavior of fertility, capital investment and income per capita is consistent with the general agreement that more secure land rights are key determinants of economic development, and with numerous empirical evidences on the demoeconomic effects of landownership in some developing countries and in history.