The Lasting Development Impacts of El Salvador’s 1980 Land Reform

Over the twentieth century, many countries in Latin America implemented land reforms that created agricultural cooperatives. Despite their prevalence across Latin America, little is known about the lasting development impacts of these land reforms and the cooperative systems they created. This chapter examines the case of El Salvador and its 1980 land reform. During this reform, properties owned by individuals with cumulative landholdings over 500 hectares were reorganized into cooperatives managed by the properties’ former workers, but properties belonging to individuals with less than 500 hectares remained as privately-owned haciendas. Comparing similar properties just above and below this ownership threshold, I present evidence on the lasting impacts of cooperative property rights on crop specialization, productivity, and worker equity in El Salvador. I find that land reform cooperatives are (i) less likely to produce cash crops and more likely to produce staple crops, and (ii) are less productive when producing cash crops but more productive when producing staple crops. Furthermore, areas exposed to the reform have more equitable incomes than those that were less exposed.