PROPERTY, WORK & WEALTH
March 20, 2008
From about 1960 to 1990, thousands of Peruvians moved from rural areas to cities, says Daniel K. Benjamin, a professor at Clemson University. These squatters had to physically defend their property claims against invasion by other potential squatters, and against the possibility that the state might seek to evict them. Squatters found that the only effective defense was to ensure that one or more household members -- typically adult -- were in residence in the home at all times.
Between 1996 and 2003, the Peruvian government sought to strengthen property rights by issuing property titles to more than 1.2 million urban households, whose 6.3 million members comprised one-quarter of Peru's population.
Recent research by Erica Field finds that once individuals had secure property titles, their behavior changed notably in two key dimensions:
- Because the titling program meant that people no longer had to be physically present to defend their property against invasion or confiscation, many more people could seek employment outside of the home.
- The result was a 14 percent increase in the labor supply, or about one additional worker per household added to the labor market.
- This, in turn, increased household incomes.
- Squatters had found that adults were more effective at protecting property than were children.
- Prior to the titling program, many children had been working (rather than going to school), so that adults could stay home to defend their land.
- Once the titling program began, adults took the place of children in the workforce, enabling many more children to spend their days in school.
- This effect was particularly evident in smaller families, where there had been greater reliance on child labor.
Through the remarkably simple expedient of securing titles to property, Peru is demonstrating that improved institutions are both feasible and beneficial, says Benjamin.
Source: Daniel K. Benjamin, "Property, Work & Wealth," PERC Reports, Spring 2008.
Browse more articles on Economic Issues