Tillers of Prosperity: Land Ownership, Reallocation, and Structural Transformation

Kitamura, Shuhei

This paper analyzes the impact of a large-scale land ownership reform on the reallocation of capital and labor, and structural transformation. In prewar Japan, labor was abundant and capital was scarce in the agricultural sector. Using a novel dataset, I show that the land reform enforced by the Allies after World War II, which redistributed a large area of farmlands from landlords to tenants and promoted equality, led farmers to use more low-cost agricultural machines when they became available and to rely less on family labor for production, resulting in an increase in the outmigration of farmers' children from rural to urban areas and an increase in agricultural income. Then, I quantify the impact of the factor reallocation on the entire economy using a two-sector neoclassical growth model, and find that (a) both labor and capital reallocation affected economic growth, and (b) the standard of living during the postwar period was significantly lower without such reallocation. These results indicate that not only labor, but also capital, including agricultural machines, is an important factor for structural transformation and that the agrarian institution plays a vital role in this process.

Keywords: Land ownership, agrarian institutions, agricultural mechanization, appropriate technology, reallocation of capital and labor, structural transformation, micro-macro development

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More About This Work

Academic Units
Center on Japanese Economy and Business
Center on Japanese Economy and Business, Graduate School of Business, Columbia University
Center on Japanese Economy and Business Working Papers, 381
Published Here
March 18, 2022