Property Rights Imperfections, Asset Allocation and Welfare: Co-ownership in Bulgaria

Liesbet Vranken 1, 2 Karen Macours 3, 4 Nivelin Noev 5 Johan Swinnen 1, 6
1 LICOS Center for Institutions and Economic Performance
2 Department of Earth and Environmental Sciences [Leuven-Heverlee]
3 PSE - Paris-Jourdan Sciences Economiques
4 PSE - Paris School of Economics
5 European Commission
6 University of Leuven
Abstract : This paper analyzes how imperfections of property rights affect households' allocation of assets using micro-survey data from Bulgaria. Co-ownership of assets is widespread in many countries due to inheritance. Central and Eastern Europe offers an interesting natural experiment to assess the effects of this type of property rights imperfection because of the asset restitution process in the 1990s. In Bulgaria, where co-ownership is very prominent and land is strongly fragmented, the land reform and inheritance legislation allows identifying the impact of co-ownership by taking advantage of a discontinuity created by a minimum plot size law. We find that land in co-ownership is more likely to be used by less efficient farm organizations or to be left abandoned, and that it is related to significant welfare losses. The paper hence provides evidence of sub-optimal land allocation following a privatization that established formal but imperfect property rights.
Keywords : Property rights Asset allocation Land markets
Document type :
Journal articles
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Submitted on : Tuesday, November 20, 2012 - 9:52:53 AM
Last modification on : Thursday, February 21, 2019 - 10:30:03 AM

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Liesbet Vranken, Karen Macours, Nivelin Noev, Johan Swinnen. Property Rights Imperfections, Asset Allocation and Welfare: Co-ownership in Bulgaria. Journal of Comparative Economics, Elsevier, 2011, 39 (2), pp.159-175. ⟨10.1016/j.jce.2010.12.003⟩. ⟨halshs-00754535⟩

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