Are land and economic mobility connected?

This article was originally published in on June 28, 2023 by Ashesh Shrestha. Mr. Shrestha ​​is a researcher at Samriddhi Foundation, an economic policy think tank based in Kathmandu. The views expressed in this article are the author’s own and do not represent the views of the organization. Author can be reached at [email protected]

Nepal undertook land reform between 1951 and 1964. During this time, the practice of gifting land for political purposes by the elites and rulers in the form of ‘Birta’, ‘Jagir’, ‘Rakam’ and ‘Jimidari’ (all non-taxed gifts) were abolished especially with the introduction of ‘Birta Abolition Act’ in 1959. Early reports undertaken by the Government of Nepal on land reform repeatedly identify this history of feudalistic practices in land management as a major problem that perpetuated the advantages of the elites since land was the only source of capital formation and wealth in modern Nepal during that time. This kind of narrative has continuously influenced popular opinion in Nepal. Land reform, therefore, has been a major political agenda in every election with all the major political parties’ election manifestos promising land redistribution as well as other kinds of agrarian reforms tied to land.

For instance, Nepali Congress (NC) in its election manifesto of 2013 general elections talked about effective implementation of ‘Land Use Act’ as well as introducing a law that established the rights of local farming communities in the commercial use of genetic resources. Similarly, Communist Party of Nepal, Unified Marxists Leninist (CPN – UML) as well as Communist Party of Nepal, Maoists (CPN-M) in their joint election manifesto of 2017 general elections promised ‘Scientific Management of Land’ which introduces classification of land based on land use policies as well as encouraging non-conversion of agricultural land into any other category. This manifesto also promises to encourage cooperative farming through subsidies in agriculture mechanization, fertilizers, seeds, technology and processing and storage.

Based on this narrative, if the advantages of owning large tracts of land persists then this should have a positive effect on intergenerational mobility of children of landowners. Research focused on developed economies around the world highlights the persistence of wealth over multiple generations propagating long-term economic inequality. Familial wealth is an inherent determinant of economic success not only through direct transmission in the form of inheritance/bequest but also through investment in human capital. In an attempt to test the narrative, researchers at Samriddhi Foundation undertook research attempting to see what kind of effect parental land has on economic stature of children of landowners. In other words, the research aims at investigating the relationship between landownership and intergenerational economic mobility.

The initial findings have quite interestingly defied the existing narrative. In general, agricultural land seems to have a negative effect on intergenerational mobility. Here, mobility is measured in terms of occupational mobility. Intergenerational mobility has been measured in relative and absolute terms. Occupation has been categorized into four broad categories and each category is ranked based on the prestige and earnings accrued. The first category pertains to all agriculture and farming related occupations, the second category contains all manual labor jobs, the third category is white-collared office work and the fourth category is public-sector jobs. Public sector/government jobs are the highest-ranked jobs which are followed by white-collared office works. Blue-collared manual labor jobs stand third in the ranking, and agriculture and farming jobs are at the bottom.

Relative mobility of an individual is any deviation from the occupational rank followed by the majority of the people in the district where he/she is born, whereas absolute mobility is a simple difference between a child’s occupational rank and parent’s occupational rank.

Land reform has been a major political agenda in every election with all the major political parties’ election manifestos promising land redistribution as well as other kinds of agrarian reforms tied to land.

As mentioned above, for those who possess parental land, their chances of climbing up the economic (occupational) ladder is lower than those who do not possess parental land. In other words, we can say that land holds you back and children of landowners tend to get stuck in subsistence agriculture. Such an effect is even worse for those children whose parents are involved in agriculture.

Children who are endowed with higher land value and lower parental occupation have experienced relatively lesser mobility in occupation in comparison to those children who are endowed with higher land value and whose parents’ occupational ranks are higher. This implies that individuals whose parents are involved in agriculture which is the lowest ranked occupation have low chances of moving towards higher ranked occupation even though they are endowed with higher land value. Moreover, the major factor which drives economic mobility positively is education. People who are endowed with higher levels of education tend to climb higher in occupational hierarchy.

Based on the research, we can conclude that ownership of land is not necessarily tied to economic well-being and policies which aim to redistribute land might not be effective in terms of reducing long term inequality. The focus should instead be on increasing the access to quality education which, as the research suggests, would be beneficial for long-run economic wellbeing of the people.