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The Impact of Land Ownership Inequality on Rural Factor Markets

By Fatma Gul Unal

Fall 2007

Utilizing a heretofore untapped household-level World Bank Survey from rural Turkey for 2002, this paper explores the link between land ownership concentration and rural factor markets. We construct a unique index which measures market malfunctioning based on the neoclassical model linking land and labor endowments through factor markets to household income, and test if land ownership concentration affects market malfunctioning empirically. Based on our empirical investigation in which we separately test the relationship at province, town and village levels, we find a positive and significant relationship between market malfunctioning and land ownership concentration. This suggests that factor markets are structurally limited in reducing existing inequalities as a result of land ownership concentration. Our findings show that in the presence of land ownership inequality, malfunctioning rural factor markets result in increased land concentration, increased income inequality, and inefficient resource allocation.

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Read More: Agriculture, Economy, Turkey, Europe, Middle East

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