Inter-Generational Effects of Titling Programmes: Physical vs. Human Capital

Abstract

Programmes aimed at giving legal ownership titles to the occupants of land (‘titling programmes’) are associated with an income (or wealth) effect that induce higher expenditure on normal goods like education and health services. There is also a substitution effect: the elimination of expropriation risk makes home investment more attractive and increases the ‘opportunity cost’ of other forms of spending. The net effect on human capital is ambiguous. Using data from a natural experiment in Uruguay we find that titling favours home investment to the detriment of some dimensions of human capital investment for children of 16 and under.