Land Concentration and Long-Run Development in the Frontier United States

Cory Smith, University of Maryland

Despite their popularization as bastions of pioneer equality, America's frontier regions often exhibited highly concentrated patterns of land ownership. A patchwork of policies opened some areas to large-scale farming by absentee landlords but reserved others for settlement by small farmers. This paper studies the impacts of land concentration on the long-run development of the frontier United States using quasi-random variation in these allocation procedures. I collect a large database of modern property tax valuations and show that historical land concentration had persistent effects over a span of 150 years: lowering investment by 23%, overall property value by 4.4%, and population by 8%. I argue that landlords’ use of sharecropping raised the costs of investment, a static inefficiency that persisted due to land market frictions. I find little evidence for other explanations, including elite capture of political systems. I use my empirical estimates to evaluate counterfactual policies, applying recent advances in combinatorial optimization to show that an optimal property rights allocation would have increased my sample’s agricultural land values by $28 billion (4.8%) in 2017.

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 Presented in Session 247. Land Prices in the Antebellum Mississippi and Missouri Valleys