This paper examines the effects of restrictive property rights on farmland on the ‘condensed decline’ of rural areas and agriculture in South Korea. It is a well-established thesis in the economic history literature that secured property rights and inclusive institutions are essential in and conducive to long-run economic development. However, determining the nature of a certain institution is not always straightforward, especially if the relevant society is under a historically advanced institutional regime. One example is the farmland institution of modern South Korea. Despite drastic transitions in its political and economic status in the last century, South Korea’s farmland institution has hardly changed since 1950 when the renowned land reform was implemented. By limiting tenancy and enlargement of farmland, this institution pursues protecting small-sized family farms which cultivate their own field. On one hand, it has securing and inclusive nature in that it prevents peasants from being extracted by powerful landlords. On the other hand, it is an impingement on property right that restricts the free choices of farmers. Unfortunately, under this farmland institution, South’s rural society and agriculture have long suffered from diminishing population and competitiveness for decades, while the county itself was rapidly growing. I analyze how the former institution affected the latter decline from 1960 to 1995. The results show that successful enforcement of the institution drove farmers out of agriculture rather than protecting them. I confirm the causality by introducing historical IV and controlling for regional environmental characteristics.

Authors:
Jongryong Park, Seoul National University, South Korea

About the Presenter(s)
- A Ph.D. student of the Department of Economics, Seoul National University, South Korea.
- Major: Economic History

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www.researchgate.net/profile/Jongryong-Park

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