7 - The Long-Term Consequences of Peru’s Property Rights Gap

Summary

This chapter uses original subnational data on land reform in Peru as well as data on property rights and metrics of development to investigate how the creation of local-level property rights gaps shaped subsequent economic and social outcomes linked to development. The analyses utilize a geographic regression discontinuity design that takes advantage of Peru’s regional approach to land reform through zones that did not entirely map onto major pre-existing administrative boundaries. These zones were created with aid from the United States in the aftermath of World War II. This chapter finds that local property rights gaps in Peru drove a slower shift away from agricultural labor, lower agricultural productivity and educational attainment, and higher rates of inequality and poverty. Land titling that began under President Fujimori's neoliberal reforms helped to close the property rights gap. But some of its negative development consequences persisted, in part due to a return to land inequality. The findings are not driven by Peru's civil war, pre-reform hacienda presence, or public goods provision.