2007): “Occupational Choices: Economic Determinants of Land Invasions,” mimeo

Abstract This study estimates the effect of economic conditions on redistributive conflict. We examine land invasions in Brazil using a panel dataset with over 50,000 municipality-year observations. Adverse economic shocks, instrumented by rainfall, cause the rural poor to invade and occupy large landholdings. This effect exhibits substantial heterogeneity by land inequality and land tenure systems, but not by other observable variables. In highly unequal municipalities, negative income shocks cause twice as many land invasions as in municipalities with average land inequality. Cross-sectional estimates using fine within-region variation also suggest the importance of land inequality in explaining redistributive conflict. Keywords: land conflict, inequality, redistribution, rainfall, political economy, development, social movement, collective action JEL codes: D74, Q15, D3, O17, P16 Introduction Conflict over land is endemic to many rural economies. In environments marked by a highly skewed distribution of property, incomplete land and credit markets, poorly or unevenly enforced property rights, and weak political institutions, agents often resort to extralegal means to improve their economic positions. The poor frequently invade private properties and occupy them until either forcibly expelled or granted official titles. Land conflict, which is prevalent in many countries such as Brazil, South Africa, Uganda and Venezuela, may distort the allocation of resources in the agricultural sector away from productive uses and thereby contribute to the persistence of rural poverty. How do economic conditions affect this redistributive conflict? This paper explores this question using a rich municipal-level dataset of 5,299 land invasions from 1988 to 2004 in Brazil. We follow Miguel, Recent microeconometric studies have examined two channels by which economic factors can cause conflict: (1) lowering the opportunity cost of engaging in conflict, and (2) increasing the returns to violence. With respect to opportunity costs, in a study of the Colombian civil conflict, Consistent with previous findings about the opportunity-costs channel, our paper finds evidence that rural productivity shocks, such as droughts, lower the returns to agricultural labor and thus increase conflict. This study, however, is the first to show that the effect of income shocks exhibits heterogeneity in ways consistent with economic theories of conflict as well as with qualitative evidence. Previous papers have been unable to examine many plausible sources of potential heterogeneity because of data limitations. By contrast, our panel dataset, which includes over 50,000 municipality-year observations, enables testing of various interactions. Another important contribution is that we examine conflicts that are explicitly redistributive, whereas other studies predominantly consider civil wars, which are often fought for a variety of economic and non-economic reasons. While the predicted effect of income shocks on conflict is relatively straightforward, the relationship between inequality and conflict is more ambiguous. 1 At first glance, the link between land inequality and land invasions may appear obvious. High land inequality concentrates property in relatively few landholdings, so the returns to invading the largest properties increase. In addition, high land inequality typically is associated with a higher percentage of the population that is landpoor, which may heighten sensitivity to economic shocks and thus increase land invasions. However, numerous scholars [e.g.