Land rights, rental markets and the post-socialist cityscape

Abstract

Inefficiently organized, factory-dominated cityscapes have been one of the more enduring legacies of the twentieth century experiment with socialist central planning in Eastern Europe and the Soviet Union. Drawing on a unique survey of large, formerly state-owned urban industrial firms in Russia, we explore how land tenure reforms affect the pace at which this legacy is being erased. For various historical, political, and economic reasons, there is substantial variation across firms as to their ownership of the land on which they sit. Despite facing no additional formal constraints, those that do not own their plots rent them out at a lower frequency than those that have acquired private tenure to their land. The privatization of plots, in other words, promotes the development of a rental market that transfers land use rights away from socialist-era industrial users. We address the potential endogeneity of land tenure using a measure of regional variation in urban land policy and Communist party vote shares as instrumental variables.