Land titling: a natural experiment

During a session on 'legal empowerment of the poor' at the PSD Forum, Ernesto Schargrodsky told a fascinating story about land titling in a Buenos Aires neighborhood. Due to the special circumstances of the area, he was able to analyze land titling as an exogenous variable in a study on the income, education and investment of poor squatters. His recent paper with Sebastian Galiani is definitely worth a read for those interested in the practical application of DeSoto’s theories.

In this elegant natural experiment, land titling led to higher levels of property investment and childhood education. It did not, however, generate improvements in access to credit or income levels. Interestingly, with the titling program came a more pro-market belief structure and higher trust among the squatters. (See their earlier paper for more on this last point.)