Land Tenure, Price Shocks and Insurgency: Evidence from Peru
Abstract: Does land tenure fuel armed conflict? If so, which types of property arrangements lead to greater violence? I revisit this longstanding question by exploiting exogenous variation in the agricultural incomes of Peruvian coffee producers to compare how they affect violent outcomes in districts under different property arrangements. Using detailed data on district level land tenure and violent attacks by the Peruvian guerrilla and government army between 1990 and 2000, I find that negative price shocks leads to an overall increase in violence, particularly from guerrillas. Yet, such spike in violence is unchanged in districts with a prevalence of individual ownership but smaller for districts under communal arrangements. These results suggest that forms of shared ownership may better attenuate income shocks from international markets. A close examination of the mechanisms at work shows that negative price shocks led to a higher rate of unemployment in ownership areas than in communal land tenure districts. Consistent with this interpretation, coffee price shocks only have an effect on violence at times when coffee is not being harvested, hence unemployment is larger. The paper provides the first micro-estimations of the role of different property arrangements on violence intensity in Peru.
