Property Rights, Land Conflict and Tenancy in Brazil

Tenancy has been a means for labor to advance their socio-economic condition in agriculture yet in Brazil and Latin America, tenancy rates are low compared to the U.S. and the OECD countries. We test for the importance of insecure property rights in Brazil on the reluctance of landowners to rent because of a fear of expropriation arising from land reform. Since 1964, the Land Statute in Brazil has targeted rental lands for redistribution. The expropriation of farms, resulting from land conflicts, is currently at the heart of land reform policies in Brazil. Land conflicts are a means for landless peasants to bring attention to land reform agencies for the need for redistribution. Land conflicts may also signal to landowners that their land is at risk for expropriation. Utilizing data across all counties in Brazil, we found that land conflicts reduce the likelihood of tenancy. This result implies: a reduction in agricultural efficiency; a reduction in the well-being of potential tenants, now landless peasants; and an expansion of the agricultural frontier through deforestation. Because of endogeneity between land tenancy and land conflict we instrument land conflict with Catholic priests