Land Reform in the Presence of Monitoring Costs and International Trade

This paper elucidates the implications of transaction costs in agrarian labor hiring activities in a two-sector model of international trade and identifies a link between the size distribution of land and intersectoral allocation of productive inputs. Ceteris paribus, a more unequal distribution of land increases the amount of out-migration from agriculture, a shrinkage of the production possibilityset and a decrease (increase) in the volume of trade if and only if agriculture is the exportable (importable) sector. In addition, non-intervention in factor and commodity markets is constrained optimal only when land redistribution is not a feasible policy option