Contrary to theories emphasising the importance of asset ownership for helping the rural poor out of poverty, a study by A. Nilesh Fernando at Harvard shows that in India, inheriting agricultural land can both restrict migration to urban areas (-0.02pc per acre) and reduce the likelihood of taking up nonagricultural work in rural areas (-1.8pc per acre). The effect of inheriting an additional acre is 10 times as large (-3.4pc per acre for migration; -21pc per acre for nonagricultural occupations) for those born into families with relatively small landholdings (less than three acres). Because selling, renting or leaving behind assets is restricted by cultural obligations — in this case, Hindu custom requires that the eldest son in the family support his parents in their old age, which often results in occupational succession — inheriting land can limit mobility for the poor, specifically firstborn sons.

(Source: Harvard)

Published in Dawn, Business & Finance weekly, February 22nd, 2016

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