The distributional effects of land controls in agriculture

The paper introduces a framework for analyzing the impacts of land control programs on agricultural production under heterogenous land qualities, heterogenous production technologies and imperfect capital markets. It shows that the introduction of diversion programs tends to benefit land owners while harming operators. Moreover, it tends to increase the separation of land ownership and operation and increase concentration among operators. Diversion programs tend to raise land prices less than proportional to the increases in rental rates. They encourage the adoption of yield increasing technologies, and may also encourage adoption of cost reducing technologies when credit is a binding constraint. Participation in voluntary government programs tends to be greater in regions with higher costs, less efficient marginal technology and less efficient marginal land.