Land Ownership and Development: Evidence from Postwar Japan

Shuhei Kitamura (University of Rochester)

Abstract: This paper analyzes the effect of land ownership on technology adoption and structural transformation. During a historically large-scale land reform in post-war Japan, the ownership of farm plots was redistributed from landlords to tenants who had cultivated the land and many tenant farmers became landowning farmers. I find that agricultural technology which became available after the reform tended to spread more quickly into municipalities that had the high share of owner farmers. Moreover, I find that the adoption of the labor-saving technology alleviated mobility constraints, and led to out-migration of young population from rural areas to urban areas when urban sectors required more low-cost labor. Finally, simulation results show that land reform and technology adoption had a large effect on economic growth by fostering the growth of urban sectors through labor reallocation and by increasing agricultural productivity through capital-labor substitution, although the most of the effect is explained by the urban development.