The Political Economy of Land Institutions, Tenure and Agricultural Productivity1 SABRIN BEG,z zYale University (e-mail:
[email protected]) October 22, 2014 Abstract Unequal initial asset distribution can shape the identity and incentives of elites, which in turn affect pub- lic goods and development. I study the effect of land inequality and presence of landed elites on electoral competition and public goods provision in the context of Pakistan. Landowners can make transfers to share cropping tenants at a low cost, allowing them to win electoral support and sway policy in their favor. House- hold data from Pakistan is used to show that when an election is introduced after a military regime, politician landlords offer concessions on input costs to their tenants, while landlords with no political incentives do not. Technical change increases the cost of tenancy in the presence of moral hazard, attenuating landlords electoral advantage. I use electoral data to test the effect of an exogenous shift in productivity in areas where originally landlords were politically influential, i.e. initial land concentration is high. Exploiting innovations due to high yielding variety seeds as a shock to agricultural productivity, and colonial land distribution as a proxy for land concentration, I show that technical change alters the identity and incentives of the political elite; it lowers likelihood of land-owning politicians in office, improves electoral competition and shifts the composition of public goods (lowering the public goods preffered by land owners, while increasing others). Thus, development itself can influence the interplay of inequality and elite capture. Keywords: Land Inequality; Clientelism; Public Goods; Colonial Institutions; Electoral Competition; Polit- ical Economy.