Collective Defense by Common Property Regimes: the Rise and Fall of the Kibbutz

Liang Diao (Simon Fraser University)

Abstract: Common property regimes have long been considered inefficient and short lived, as they encourage high-productivity individuals to leave and shirking among those who stay. In contrast, kibbutzim -- voluntary common property settlements in Israel -- have lasted almost for a century. Recently, about 75% of kibbutzim abandoned the equal-sharing rule and paid differential salaries to members, based on their contributions. To explain the long persistence of the kibbutzim, as well as the recent kibbutz privatization, I develop a model that highlights the public defense provided by common property regimes. The model predicts that the privatization of common property regimes can be attributed to the decrease of external threats. To test this prediction, I construct a kibbutzim-level panel data set that contains the terrorist attacks near each kibbutz and the institutional status (i.e. preserving the equal-sharing rule or not) of each kibbutz in the years from 1986 to 2014. The empirical results show that an increase in the number of Israeli deaths near a kibbutz significantly decreases the probability that the kibbutz shift away from equal sharing.

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