Question

4. Does a Land Reform solve the risk aversion problem why or why not? Do the world land reform experiences generally suggest good outcomes in terms of agricultural output? Under which scenarios did the output rise under Land Reform?

Answer 1

The redistributive Land Reforms appear to promote more equity and efficiency. Reforms differ in the extent to which they affect the long term distribution of land. At one extreme are rules banning all transfers of redistributed land except through inheritance. More common and less extreme are permanent land ceiling regulations, which, restrict the number of acres a landowner can own. But these reforms come with its own advantages and disadvantages, Permanent Land Reform reduces uncertainty but at the same time it can stand in the way of efficient reallocation of land.

In context of agriculture, in many countries, the ownership and land use rights are poorly defined and this plausibly affects the ability and incentives of farmers to transact in land.Therefore, the result is two fold, it establishes both the importance of land misallocation as a source of productive inefficiency in the agricultural sector, as well as the positive role that well defined property rights can have in solving the agricultural problem.

The reform in China, namely the Rural Land Contracting Law, in which it increased legal protections for land contracts and specifically granted farmers legal protections for leasing contracts over agricultural land.

The probability of new renting transactions increased by about 10% and the area of land rented out increased by 7%, the findings also show that at the village level, the land reform has significantly increased overall output and aggregate productivity by approximately 7%.Hence this is example of increased agricultural output due to Land Reform.