Governments Can Create Wealth

A new article by Galiani and Schargrodsky in press at the Journal of Public Economics examines the effects of providing land titles to squatters in Buenos Aires. They find that:

... entitled families substantially increased housing investment, reduced household size, and enhanced the education of their children relative to the control group. These effects, however, did not take place through improvements in access to credit. Our results suggest that land titling can be an important tool for poverty reduction, albeit not through the shortcut of credit access, but through the slow channel of increased physical and human capital investment, which should help to reduce poverty in the future generations.

Enforcing property rights matters.