Working Paper: CEPR ID: DP13563
Authors: Julia Bird; Anthony J. Venables
Abstract: Land rights and tenure systems are an important factor behind poor housing and inefficient land-use in developing country cities. In Kampala, Uganda, four systems of land tenure coexist, allowing a detailed study of the effects of these on household and firm location decisions. Spatially disaggregated data across the city suggest that the presence of a traditional land tenure system (called mailo) skews land-use towards informal housing and away from productive activities. Using a structural model of the city we show that this due to mailo having a positive value for occupants of informal housing, attributable to mailo-specific amenity benefits and/ or rent caps. We use the model to investigate the effect of converting all mailo land in the city to leasehold. Despite direct loss of amenity experienced by mailo residents, aggregate city income may rise substantially because of more efficient land-use. Manufacturing firms move into formerly mailo areas and form new clusters of activity. This increases urban wages, particularly among the low skilled, and raises aggregate urban real incomes by 2% in the absence of localisation economies and as much as 6.7% in the presence of such economies of scale.
Keywords: urban land tenure; land use; customary; Uganda
JEL Codes: O1; R3; R52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| converting mailo land to leasehold (Q15) | increase in aggregate city income (R11) |
| mailo land tenure system (Q15) | concentration of informal housing (R28) |
| concentration of informal housing (R28) | negative impact on economic activity (F69) |
| mailo land tenure system (Q15) | negative impact on economic activity (F69) |
| mailo land tenure system (Q15) | amenity benefits for informal housing occupants (R21) |
| amenity benefits for informal housing occupants (R21) | lower employment densities in business services (L89) |
| mailo land tenure system (Q15) | lower employment densities in business services (L89) |
| mailo land tenure system (Q15) | higher informal housing density (R31) |
| mailo land tenure system (Q15) | economic activity (E20) |