Impact of Land Reform on Productivity, Land Value and Human Capital Investment: Household Level Evidence from West Bengal

While land reform has been the subject of considerable scholarly debate, most of the analyses have been at the aggregate level and focused on rather short-term effects. We use a listing of more than 90,000 households in some 200 villages in West Bengal to highlight the impact of the state's 1978 land reform program on human capital accumulation and current productivity of land use. While we ascertain a highly significant positive effect on long-term accumulation of human capital, our analysis also suggests that, partly because land that had been received through land reform is still operated under share tenancy arrangements, productivity on such land is significantly lower than the average. The combination of lower productivity of reform land relative to own land and land rental and sale's restriction of reform land is associated with significantly lower purchase and sale's price of reform land compared to own land. Programs to allow land reform beneficiaries to acquire full ownership could thus have significant benefits.