Abstract
The Wealth-Differentiated Impact of Property Rights Reform Theory suggests that land titling may positively influence agricultural performances by stimulating both the investment demand and the formal credit supply as well as by speeding the transfer of land from the less to the more productive agents on the land market. This article provides an econometric investigation of these hypotheses, based on panel data collected from a sample of 300 Paraguayan farms households surveyed in 1991 and 1994. This data set makes possible to identify the effect of land title stripped of the effects of farm and farmers characteristics that may be correlated with land tenure status. The first estimation of the gross impact of land title shows significant positive effects on farm productivity. Switching regressions models are used to estimate the joint impact of land title on the supply of credit and the demand for investment. Results support the hypotheses. However, the credit supply effect is found to be more pronounced in the case of large farms whilst the investment demand effect appears lower when farms are credit constrained. Moreover, the analysis of land market transactions suggests that the efficient redistribution effect is impeded by credit constraints.
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