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

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  • Liesbet Vranken

    (LICOS Center for Institutions and Economic Performance - KU Leuven - Catholic University of Leuven = Katholieke Universiteit Leuven, Department of Earth and Environmental Sciences [Leuven-Heverlee] - KU Leuven - Catholic University of Leuven = Katholieke Universiteit Leuven)

  • Karen Macours

    (PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Nivelin Noev

    (European Commission - European Commission [Brussels])

  • Johan Swinnen

    (LICOS Center for Institutions and Economic Performance - KU Leuven - Catholic University of Leuven = Katholieke Universiteit Leuven, University of Leuven - KU Leuven - Catholic University of Leuven = Katholieke Universiteit 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.

Suggested Citation

  • Liesbet Vranken & Karen Macours & Nivelin Noev & Johan Swinnen, 2011. "Property Rights Imperfections, Asset Allocation and Welfare: Co-ownership in Bulgaria," Post-Print halshs-00754535, HAL.
    • Handle: RePEc:hal:journl:halshs-00754535
    DOI: 10.1016/j.jce.2010.12.003
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