Property Rights and Economics

Property Rights and Economics

Economic Scene; A study looks at squatters and land titles in Peru.

By Alan B. Krueger
Published: January 09, 2003

AN estimated 400 million to 600 million people worldwide are squatters, living on land they have no legal right to occupy, usually on the outskirts of cities. Urban squatting poses a growing economic problem in less-developed countries.

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3 Responses

  1. Giving land titles to squatters can lead to economic development in poor countries as advocated by a Peruvian economist, Hernando de Soto. In this article the researcher, Erica Field, studied land title reforms in Peru where the largest program was started by giving property titles to urban squatters. From the period 1995 to 2001, 6.3 million people were given property rights quickly for a free of $20 to $50. Miss Field had a hypothesis that without title, squatters devote extra effort and time safeguarding their land from intruders by having someone stays home protecting their property. This leads to decreased supply of labor leading to less opportunity to earn an income. Hence, Miss Field observed title reforms in different neighborhoods to check whether giving land titles increased or decreased the supply of squatters. Her results strongly suggested that labor supply increased as a result of granting land titles. In numbers, title reforms resulted in hours of work by 16 hours a week among those without land title initially. The amount of labor supplied by children was 27% lower for families for families with land titles.

  2. The article discussed how giving land titles to urban squatters leads to economic improvement and increase in labor supply due to improved allocation of work effort by not devoting labor to protect the property. I came across an article, ‘Land and labour in processes of urbanisation: The dialectics between popular practices and state policies in Peru’, which discusses the effects on state development policies regarding collective occupation of land on the outskirts of urban areas. In these urban neighborhoods, infrastructure is often the result of collective work and action. This article relates these collective practices of work to increased significance of land titles and how it can be used as collateral for acquiring loans besides exploring the responses of urban squatters to the official state policies which affects the economy.

  3. This topic is applied research.
    In this applied research paper, Erica Field, is studying how granting property rights leads to economic development because she wants to know how much labor supply and earnings of squatters increase after receiving property rights in order to help the readers understand that granting property rights leads to economic improvement in the lives of the squatters and that the land could also be used as a collateral to obtain loans for setting up new businesses leading to long-term benefits too.

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