Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 28: Demopgraphic Resonse to Agricultural Reform - Long-run Effects on Consumption, Wages and Population Density

Mia Horn af Rantzien

Abstract: Agricultural reform in a rural economy, comprising two separable landholding classes is analyzed in an over-lapping generations framework. "The poor" work the land and have children to provide for family labor and old age support. "Landlords" only use hired labor and maximize profits. It is shown that a land reform in favor of poor peasants increases the market wage and life consumption among poor peasants, and decreases population density in the new stationary state. The effects of a land- augmenting green revolution depend on its distributional characteristics. If directed towards landlords, such reform will decrease life consumption in poor households, decrease the market wage and increase population density in the new stationary state, while the effects are opposite if directed towards poor households.

Keywords: Land reform; endogenous fertility; population old age security; farm size

JEL-codes: J13; O12; Q12; Q15

27 pages, November 1994

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