Persistent specialization and growth: The Italian land reform

Abstract

The impact of land redistribution on structural transformation is ambiguous. While large landowners may hinder industrialization by restricting access to education, larger farm scale can facilitate mechanization and productivity growth. This study uses novel fine-grained data to examine the long-term effects of the 1950 Italian land reform, which redistributed land from large landowners to landless farmers. Employing two difference-in-differences strategies, we find that the reform significantly slowed industrialization in affected municipalities, which, fifty years after the reform, exhibited an agricultural employment share approximately 70% higher than the estimated counterfactual scenario. Reductions in agglomeration and occupational mobility emerge as key mechanisms, while education seemingly played a limited role. Finally, we show that the reform significantly hindered the overall economic growth of affected municipalities between 1970 and 2000.