Working Paper
Land Ownership Inequality and the Income Distribution Consequences of Economic Growth

While unequal land ownership has a role to play in explaining historically high levels of income inequality, this paper asks what role agrarian structure plays in explaining contemporary trends of increasing income inequality. Using a Gini decomposition framework to structure the analysis and drawing on a variety of theoretical historical and econometric evidence, the paper identifies four linkages or pathways between agrarian structure and income inequality. Panel data estimates of a mixed effects model of income inequality find significant evidence of the 'self-dampening level' and 'legacy effects' of agrarian structure on income inequality. Weaker but provocative evidence is found supporting the notion that agrarian structure conditions the income distribution consequences of contemporary growth through 'exclusionary agrarian growth' and 'unequal human capital accumulation' effects. The paper concludes by noting that, while agrarian asset redistribution is one implication of the paper's findings concerning the linkages between agrarian structure and inequality, another is that policy can attempt to redress the financial market imperfections which seem to underlie the linkages between agrarian structure and the evolution of income inequality.