Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/245675 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14624
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We examine the impact of legislated land ceiling size on capital investment and industrialisation in the Indian states. India's land ceiling legislations of 1960s and 1970s imposed a ceiling on maximum land holdings and redistributed above-ceiling lands. These ceiling legislations, effectively implemented or not, had increased land fragmentation and increased transactions costs of acquiring land for both strategic and non-strategic reasons. States with smaller ceiling size are thus likely to have (i) lower capital investment; (ii) less factories and lower industrialisation too. Ceteris paribus, estimates of both relative (post-1971 ceiling legislations relative to pre-1971 ones) and aggregate effects of legislated ceiling size lend support to these hypotheses, after eliminating competing explanations. These results offer insights about how to reduce transactions costs of land acquisition, policies that we claim are also applicable beyond India.
Subjects: 
land reform
land acquisition
land ceiling size
transaction costs of land acquisition
investment in capital
industrialisation
India
JEL: 
H70
K11
L38
O14
Q15
Document Type: 
Working Paper

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