Functional Distribution, Land Ownership and Industrial Takeoff

50 Pages Posted: 13 Oct 2005

See all articles by Ennio Bilancini

Ennio Bilancini

University of Siena - Deparment of Economics

Simone D'Alessandro

University of Siena - Faculty of Economics

Date Written: August 26, 2005

Abstract

This paper investigates how the distribution of land property rights affects industrial take-off and aggregate income through the demand side. We study a stylized two sectors economy where the manufacturing sector is assumed to be constituted by a continuum of small markets producing distinct commodities. Following Murphy et al. (1989) we model industrialization as the introduction of an increasing returns technology in place of a constant returns one. However, we depart from their framework by assuming income to be distributed according to functional groups' membership (landowners, capitalists, workers). We carry out an equilibrium analysis for different levels of land ownership concentration proving that, under the specified conditions, there is a non-monotonic relation between the distribution of land property rights and both industrialization and income. We clarify that non-monotonicity arises because of the way land ownership concentration affects the level and the distribution of profits among capitalists. Our results suggest that i) both a too concentrated and a too diffused distribution of land property rights can be detrimental to industrialization, ii) landownership affects the economic performance of an industrializing country by determining industrial profits and iii) in terms of optimal land distribution there may be a tradeoff between income and industrialization.

Keywords: Functional Distribution, Land Ownership Concentration, Industrialization,

JEL Classification: O11

Suggested Citation

Bilancini, Ennio and D'Alessandro, Simone, Functional Distribution, Land Ownership and Industrial Takeoff (August 26, 2005). Available at SSRN: https://ssrn.com/abstract=817825 or http://dx.doi.org/10.2139/ssrn.817825

Ennio Bilancini

University of Siena - Deparment of Economics ( email )

Via Banchi di Sotto, 55
Siena
Italy

Simone D'Alessandro (Contact Author)

University of Siena - Faculty of Economics ( email )

Piazza San Francesco, 7
I-53100 Siena, 53100
Italy

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