Job Market Paper

“Shackled to the Soil: The Long-Term Effects of Inherited Land on Labor Mobility and Consumption”

Productive assets promote the economic well-being of the rural poor; however, where frictions limit their exchange or disposal, such assets may restrict labor mobility causing a microeconomic parallel to the ‘resource curse’. Using variation arising from sibling sex composition and Hindu inheritance customs that favor sons, I estimate the long-term causal effect of inheriting land in rural India. Consistent with standard models, inheriting land facilitates borrowing and increases household consumption. Yet, where the ability to leverage land is severely constrained by frictions, either cultural obligations or land market transaction costs, the effect on consumption is entirely attenuated and negative for a subset of the sample. The most precise estimates suggest that frictions reduce the consumption benefits of a median inheritance by almost 9%. Those who inherit land are significantly less likely to migrate to urban areas and enter non-agricultural work in rural areas; effects that are accentuated by such frictions. These findings suggest that inheriting land greatly influences occupational trajectories and may, consequently, suppress consumption to an extent that overwhelms its direct benefit.