The legal doctrine of adverse possession limits the security of property rights by transferring formal land titles from absentee owners who leave their land idle to adverse possessors that use the land. This paper exploits plausibly exogenous variation in the security of land titles, as a result of historical changes of adverse possession legislation in U.S. states between 1840-1920, to investigate the causal effects of the security of land titles. I find that a reduction in the security of titles increased agricultural output. The main channel is incentivizing higher land utilization. A reduction in the security of land right is also associated with an increase of investment in farms and improved access to capital markets, as well as with an increase in the share of owner-cultivated farms and the number of mid-size farms. These findings suggest that the effect of property rights on economic development is not monotonic, and that property rights may be over secure.
This study examines the historical origins of the American individualism. I test the hypothesis that local heterogeneity of the physical environment limited the ability of farmers on the American frontier to learn from their successful neighbors, turning them into self-reliant and individualistic people. Consistent with this hypothesis, I find that current residents of counties with higher agrarian heterogeneity are more culturally individualistic, less religious, and have weaker family ties. They are also more likely to support economically progressive policies, to have positive attitudes toward immigrants, and to identify with the Democratic Party. Similarly, counties with higher environmental heterogeneity had higher taxes and higher provision of public institutions during the 19th century. This pattern is consistent with the substitutability of formal and informal institutions as means to solve collective action problems, and with the association between “communal” values and conservative policies. These findings also suggest that, while under studied, social learning is an important determinant of individualism.
The 1862 Homestead Act gave settlers in the United States' West free ownership of land conditional on five years of residency and cultivation. Between 1862-1976, about 10% of the total land area of United States was titled to about 1.6 million individuals under the act. This study examines the impact of the act on long run development. Spatial regression discontinuity and instrumental variable designs both suggest that exposure of an area to historical homesteading reduced measures of development today. Empirical evidence suggest that homesteading regions were slower to transition out of agriculture and into other sectors in the economy. We argue that in the challenging frontier environment, the requirements of the act led to positive selection of agricultural skill among homesteaders, which subsequently slowed the transition out of agriculture. Today these regions remain more rural and less geographically mobile. Moreover, the contemporary impact on income is driven by non-agricultural sectors.