This chapter employs original data on land reform and property rights to empirically test the theory. Using data from Latin America from 1920–2010 and cross-tabulation, regression, and instrumental variables analysis, the chapter find strong evidence in support of the theory that property rights gaps are generated by authoritarian regimes where the ruling coalition of political elites does not overlap with landed elites. In contrast, property rights gaps are typically closed by democracies, especially when peasants are in the ruling coalition and legislative fractionalization does not give opposition lawmakers a chance to block reform. Property rights gaps are also closed by both authoritarian regimes and democracies when countries are forced into structural adjustment programs. And left-wing ideology and state capacity play a role well in property rights gaps. This chapter also finds that the governments that redistribute property without rights also distort crop prices to render beneficiaries dependent on the government, and through a comparative analysis of nationalizations of banks and natural resources shows that the withholding of property rights over land is strategic.

This chapter begins with existing explanations for rights informality: weak state capacity, left-wing ideology, and competing state goals. It then develops a theory for understanding why governments that distribute land often withhold property rights, presiding over widespread rural property informality for long periods, and why other governments grant more secure property rights over land. Authoritarian regimes tend to redistribute land from large landowners to peasants but withhold property rights. Democracies often grant property rights to beneficiaries of previous land reforms but do not redistribute additional property. This difference is driven by how political regimes empower or disempower landed elites and peasants, differences in institutional powers, and constraints that political elites face, and the incentives of incumbency and political competition. Democracies are better at channeling popular demands into policy. But policies can also be blocked by the powerful in a legislature. Finally, foreign pressure during economic crisis can force a country to turn to international financial institutions for help. Privatization and greater security of property rights can be a condition for support.