Land Reform, Poverty Reduction, and Growth:

Evidence from India

T. Besley and R. Burgess (2000) The Quarterly Journal of Economics

December 10, 2014

Summary
Authors in this paper use panel data on sixteen Indian states from year 1958 to 1992 to consider
whether legislated land reforms (LR) had an impact on growth and poverty. The aim is to show that
redistributive policies have positive impact on poverty reduction thus neglecting some believes that
only policies promoting economic growth should be implemented.
India is an important case study of LR. It is both home to a signicant fraction of the poor in
the developing world and in the post-independence period was subjected to very large number of LR.
Authors divide LR into four categories; (i) regulating tenancy contracts (ii) abolishing intermediaries
(iii) implementing ceilings on land holding and (iv) consolidation of disparate landholdings.
Firstly authors regress the stock of previous LR, state xed eect and year dummy on poverty
measures. For more robust estimates authors look also on other policies/controls such as agricultural
yield or education expenditure. Further, political variables are used revealing that hard left parties
promote LR where as congress party has a negative inuence on LR. IV estimations is used as well.
Altogether, based on all model forms, authors conclude that only the rst two reforms reveal a negative
and signicant association between LR and both poverty gap and headcount ratio. Further LR close
the gap between rural and urban poverty. This conclusion is further supported by positive correlation
between real agriculture wages and LR.
However even if LR help the poor, the overall economic performance can be triggered . Authors
therefore also look at whether LR increased the per capita agricultural output. Overall results suggest
that only the LR that eect production relations have positive impact on poverty reduction. Important outcome is that only LR (i) and (ii) are signicant and accounting for 10% decrease in poverty
reduction.

Discussion from class

impact of land reform goes indirectly through labor market, LR itself has little eect after all

denition of LR variable is strange - number of LR - this might actually underestimate the eect.
Only legislation passes, not actual reforms. Why it successful? noon knows

why good paper? - compares LR over time not cross countries

India is a big country, each state is dierent and autonomous - allows for dierences - thats good.

why LR (increase ownership) did not increase output?

- too expensive capital, less skills in

marketing, nances

why LR (increase ownership) increase output? - motivation to earn your money. You own land
, have collateral, - can borrow from bank.