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Asset Redistribution In principal these can be dealt with using instrumental variables, but in practice instruments are hard to fnd. We use political variables as instruments (they pass tests oF over-identiFying restrictions and predict land reForms quite well) Summary of Results (1) Poverty Reduction – land reForm associated with reductions in rural poverty with eFFects com- ing mainly through abolition oF intermediaries and tenancy reForm The results are robust to diFFerent poverty measures, inclusion oF other policy variables and our instrumentation procedure (2) Agricultural Wages land reForm also appears to raise agricultural wages (3) Output eFFects Tenancy reForms appear to lower output. Other reForms have no eFFect Making Sense of the Results Theoretical model Focuses on two things: a model oF agricultural contract-
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Unformatted text preview: ing and a model oF labor supply by tenants. 3 groups: landlords who rent out land as well as Farming some oF the land themselves, tenants who rent land, and landless laborers – poor are made up predominantly oF the latter two groups – tenants and landless laborers supply labor to the labor market where it is demanded by landlords who choose to be owner-cultivators. Labor supply Function: l ∗ ( x , w ) = argmax l { u +( x + ϖ l ) − φ ( l ) } . Labor supply is decreasing in x = non-labor income = value oF tenancy in For tenant – iF land reForms increase x, then tenants would reduce labor supply to the market – tightening oF labor market would lead to increased Development Economics, LSE Summer School 2007 98...
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