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Household income, land valuation and rural land market participation in Ecuador

Abstract:

This research provides an economic analysis of agricultural land access at the household level and its relationship with rural markets and poverty in Ecuador. We find that land inequality and land market imperfections have a direct effect on household income per capita and that there is a synergy between these and imperfections in the labor and credit markets, which magnify the effect of land inequality on rural household income. In addition, the presence of multiple market imperfections intensifies the quasi-fixity of factors other than land, which affects the contribution of land to profits and land values. The labor advantage of small farmers explains the remarkable difference in reservation prices per hectare between small and medium and large farmers. However, this effect is reduced for credit constrained households. Lack of land titles is not found to discourage investments in land or to cause land values to be …