Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper analyzes the effects of land market restrictions on structural change from agriculture to non-farm in a rural economy. This paper develops a theoretical model that focuses on higher migration costs due to restrictions on alienability, and identifies the possibility of a reverse structural change where the share of nonagricultural employment declines. The reverse structural change can occur under plausible conditions: if demand for the non-agricultural good is income-inelastic (assuming the non-farm good is non-tradable), or non-agriculture is less labor intensive relative to agriculture (assuming the non-farm good is tradable). For identification, this paper exploits a natural experiment in Sri Lanka where historical malaria played a unique role in land policy. The empirical evidence indicates significant adverse effects of land restrictions on manufacturing and services employment, rural wages, and per capita household consumption. The evidence on the disaggregated occupational choices suggests that land restrictions increase wage employment in agriculture, but reduce it in manufacturing and services, with no perceptible effects on self-employment in non-agriculture. The results are consistent with the migration costs model, but contradict two widely discussed alternative mechanisms: collateral effect and property rights insecurity. This paper also provides direct evidence in favor of the migration costs mechanism.

Common Property Resource Development --- Economic Theory & Research --- Environmental Economics & Policies --- Historical Malaria --- Labor Market --- Labor Policies --- Land Market Restrictions --- Migration Costs --- Non-Agricultural Employment --- Poverty --- Rural Development Knowledge and Information Systems --- Structural Change

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper analyzes the effects of land market restrictions on the rural labor market outcomes for women. The existing literature emphasizes two mechanisms through which land restrictions can affect the economic outcomes: the collateral value of land, and (in) security of property rights. Analysis of this paper focuses on an alternative mechanism where land restrictions increase costs of migration out of villages. The testable prediction of collateral effect is that both wages and labor force participation move in the same direction, and insecurity of property rights reduces labor force participation and increases wages. In contrast, if land restrictions work primarily through higher migration costs, labor force participation increases, while wages decline. For identification, this paper exploits a natural experiment in Sri Lanka where historical malaria played a unique role in land policy. This paper provides robust evidence of a positive effect of land restrictions on women's labor force participation, but a negative effect on female wages. The empirical results thus contradict a collateral or insecure property rights effect, but support migration costs as the primary mechanism.

Collateral Effect --- Economic Growth --- Historical Malaria --- Labor Market --- Labor Markets --- Labor Policies --- Land Market Restrictions --- Migration Costs --- Population Policies --- Property Rights --- Rural Development Knowledge and Information Systems --- Wage --- Women's Labor Force Participation