Communal Land and Agricultural Productivity ✩ Charles Gottlieb2,3,4, Jan Grobovˇsek1 September 26, 2016 Abstract Communal land tenure is a typical feature of many developing countries. Such tenure regimes implement a “use it or lose it” principle by imposing restrictions to land trans- ferability that are enforced via the threat of expropriation. This paper measures the distortionary impact of communal land in a dynamic general equilibrium model of oc- cupational selection, calibrated to Ethiopia. We find that lifting restrictions on land transferability lowers agricultural employment by 19% and increases GDP by 7%. It also results in a large reduction in the ratio between non-agricultural and agricultural productivity, by 40% in real and 44% in nominal terms. Limited land transferability rationalizes a substantial fraction of the large agricultural productivity gap in poor economies. The associated loss in aggregate productivity, though, is comparatively minor. Keywords: Agricultural productivity, Growth and development, Misallocation, Land, Africa, Ethiopia. JEL: O10, O13, O40, O55, Q15. ✩ First version: September 2014. This paper has benefited from helpful suggestions by Tasso Adamopoulos, Tekie Alemu, Douglas Gollin, Madina Guloba, Roland Hodler, Philipp Kircher, Winfried Koeniger, Francis Mwesigye and Alemayehu Taffesse, as well as seminar participants at the Atlanta Fed, Cambridge, Western Ontario, York, McMaster, McGill, the North American Econometric Society Meeting (Minneapolis), CEPR Macroeconomic and Growth Meeting, EDRI (Addis Ababa), EPRC (Kampala), DEGIT XXI Conference, and World Bank Land and Poverty Conference 2015. The finan- cial support from DFID/ESRC (ES/L012499/1) is gratefully acknowledged. Email addresses:
[email protected] (Charles Gottlieb),
[email protected] (Jan Grobovˇsek) 1University of Edinburgh, School of Economics 2University of St.