Land Inequality, Agricultural Productivity, and the Portuguese Agrarian Reform (1974-1976)

Abstract

Land reforms sacrifice property rights in the name of a fairer distribution. The trade-off they imply makes their study of interest to Economic Historians: do the benefits of reduced land inequality justify the violation of property rights? The discussion about land reforms factors in both the social and efficiency consequences of land inequality. The debate preceding the Portuguese Agrarian Reform echoes these concerns and culminated in an anti-latifundia sentiment crystallized in the legislation used to justify the land occupations of 1974 to 1976. The aim of this paper is to critically assess the efficiency arguments used to justify the occupations. Was land productivity lower in latifúndio counties? A unique dataset drawn from primary sources was specially assembled to answer this question. Through standard OLS regression, this study finds that the number of agriculture journeyman per employer landowner has a statistically significant effect on agricultural productivity after controlling for geographical and soil characteristics. It also finds that introducing literacy as a control causes the effect of land inequality to disappear leading to the conclusion that policies aimed at improving human capital would have been just as effective as a land reform. Further, this study also identifies the crop mix selected as the proximate channel of transmission. Farmers in the region with the highest levels of land inequality favoured less valuable crops, like wheat. An arid climate combined with a lack of irrigation infrastructure and wheat protectionism justify this preference.