Law and Economics

Agriculture / Development / Economics / Land / Law and Economics / Policy — 2 Comments
06
Aug 12

Do Land Titles Increase Agricultural Productivity?

Not everywhere:

This paper studies the relationship between land rights and agricultural productivity. Whereas previous studies used proxies for soil quality and instrumental variables to control for the endogeneity of land titles, the data used here include precise soil quality measurements, which in principle allow controlling for the unobserved heterogeneity between plots. Empirical results suggest that formal land rights (i.e., land titles) have no impact on productivity, but that informal land rights (i.e., landowners’ subjective perceptions of what they can and cannot do with their plots) have heterogeneous impacts on productivity.

That’s the abstract of my paper titled “The Productivity Impacts of Formal and Informal Land Rights: Evidence from Madagascar,” which has just been accepted for publication in Land Economics.

The paper is notable for a few things. First, it shows that land titles have no impact on agricultural productivity in Madagascar, a country where the US government had planned on spending $110 million dollars on various initiatives aimed at “assisting the rural population to transition from subsistence agriculture to a market economy,” including via land titling. Continue reading →

Agriculture / Development / Economics / Food / Law and Economics / Methods / Micro — Comments Off
08
May 12

As You Sow, So Shall You Reap: The Welfare Impacts of Contract Farming

My article on contract farming titled “As You Sow, So Shall You Reap: The Welfare Impacts of Contract Farming” is finally out in World Development. Here is the abstract:

Contract farming is widely perceived as a means of increasing welfare in developing countries. Because of smallholder self-selection in contract farming, however, it is not clear whether contract farming actually increases grower welfare. In an effort to improve upon existing estimates of the welfare impacts of contract farming, this paper uses the results of a contingent-valuation experiment to control for unobserved heterogeneity among smallholders. Using data across several regions, firms, and crops in Madagascar, results indicate that a 1-percent increase in the likelihood of participating in contract farming is associated with a 0.5-percent increase in household income, among other positive impacts.

If I had to summarize the paper’s contribution informally, I’d say the estimates it presents of the welfare impacts of contract farming have better internal and external validity than those found in previous studies.

Click here for an ungated, older version (link opens a .pdf document), but note that the results in the ungated version had not undergone peer review, so they are not as solid.

Development / Economics / Law and Economics — 2 Comments
06
Apr 12

Beyond the Market, Part 3: A Paradox Discussed

I wrote two posts on the topic of markets last week. The posts were parts 1 and 2 of a longer post titled “Beyond the Market,” in which I highlighted some interesting facts and paradoxes about markets.

In response to those one of those paradoxes, Saleem writes:

I liked that bit:

‘It is always good, however, to keep in mind that those of us who live in industrialized countries — those of us who live in North America and in Western Europe, especially — are much less in contact with markets than some of us would like to believe.’

Would be cool to see that developed a bit more…”

So what did I mean when I said that we come in contact with the market much less than some people would have you believe? Continue reading →

Development / Economics / Law and Economics — 2 Comments
28
Mar 12

Beyond the Market, Part 2: Market Paradoxes

Yesterday, I discussed Robert Neuwirth’s book Stealth of Nations: The Global Rise of the Informal Economy, which emphasizes the activities of “illegal street vendors and unlicensed roadside hawkers.”

I concluded by noting how that brought to mind a few conversations I’d recently had with a friend who was observing how, relative to Asia and Africa, few people actually knew how to hustle in America nowadays.

In my Law, Economics, and Organization seminar, I use an old textbook by Milgrom and Roberts. By “old,” I mean that it was the textbook used to teach economics of organization when I was in college. By “old,” I mean that the book is as old as some of my younger students. But I use it because it’s a classic, and because it covers just about everything one needs to know about law and economics and the economics of organization.

Market Paradoxes

In their book, Milgrom and Roberts highlight a first important paradox of markets (I am paraphrasing): Continue reading →

Development / Economics / Law and Economics — 1 Comment
27
Mar 12

Beyond the Market, Part 1: Hustle and Flow

I am teaching my Law, Economics, and Organization class this semester. The class is for upper-level undergraduates and graduate students, so there is a good variety of backgrounds and interests among the students who enroll in it.

Since the class is a seminar, I spend about half the time teaching, with the other half spent discussing specific papers.

Last Friday, in the context of the module on relational contracts, we discussed two classic papers. The first is Greif’s (1993) paper, in which he discusses the various mechanisms used by 11th-century Jewish merchants around the Mediterranean to sustain long-distance trade. The second is Bernstein’s (1992) investigation of how diamond traders choose to “opt out” of the legal system by developing their own extra-legal institutions.

Hustle and Flow

In the spirit of both articles, I wanted to link to a somewhat dated article in Wired,  a Q&A with Robert Neuwirth, who published a book titled Stealth of Nations: The Global Rise of the Informal Economy last fall. Here is an excerpt: Continue reading →

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