Land Market Restrictions, Women's Labor Force Participation, and Wages in a Rural Economy

This paper analyzes the effects of land
market restrictions on the rural labor market outcomes for
women. The existing literature emphasizes two mechanisms
through which land restrictions can affect the economic
outcomes: the collateral value of land, and (in) security of
property rights. Analysis of this paper focuses on an
alternative mechanism where land restrictions increase costs
of migration out of villages. The testable prediction of
collateral effect is that both wages and labor force
participation move in the same direction, and insecurity of
property rights reduces labor force participation and
increases wages. In contrast, if land restrictions work
primarily through higher migration costs, labor force
participation increases, while wages decline. For
identification, this paper exploits a natural experiment in
Sri Lanka where historical malaria played a unique role in
land policy. This paper provides robust evidence of a
positive effect of land restrictions on womens labor force
participation, but a negative effect on female wages. The
empirical results thus contradict a collateral or insecure
property rights effect, but support migration costs as the
primary mechanism.