Cultivating Equality: Land Reform’s Potential and Challenges

Cultivating Equality: Land Reform’s Potential and Challenges

The original and most immediate rationale for redistributive land reform is that, at low levels of capital intensity, large farms operated by wage labor will be less efficient than small owner-operated ones. This has given rise to an inverse relationship between farm size and productivity that continues to be widely observed in the literature. In fact, colonial powers had often tried to restrict access to land by the local population to ensure a continued supply of cheap and relatively uneducated labor, despite the associated economic cost. In a sense, land reform is an effort to rectify this historical injustice and reverse the pattern whereby high inequality of land is associated with low agricultural productivity and overall economic growth.

This case for land reform is reinforced by the insight that in a situation where imperfect credit markets make indivisible investments difficult—in education, for instance—redistribution of assets can unleash growth by facilitating educational investment by the poor, as well as their effective participation in political processes. The political repercussions of large farm domination have been illustrated in the case of Chile, and inequality has also been shown to foster political conflict.

Studies indeed support the link among high initial land inequality, low levels of human capital accumulation and limited political participation. This arises partly because an educated and mobile labor force, while good for overall development, will increase the wage bill for large landlords and may thus not be supported by them politically.

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