The Effects of Rural Land Right Security on Labour Structural Transformation and Urbanization: Evidence from Thailand

Abstract

This paper attempts to contribute to the understanding of the impacts of secure rural agricultural land rights on labour structural transformation from agriculture to non-agriculture as well as on urbanization, with a specific focus on Thailand. Using province-level panel data and instrumental variable strategy, partial land right entitlement (known in Thailand as SPK4-01 titling) is found to have a positive impact on labour movement towards the non-agricultural sector. In particular, approximately 27 per cent of this impact can be explained by enhanced farm productivity. This, in addition, implies that the reduction of the opportunity costs of off-farm employment, which is also a predicted positive impact of titling on non-agricultural employment, should account for the rest of the overall impact on labour structural transformation Although SPK4-01 titling alone is found to have no significant effect on urbanization, its impact depends significantly on within-province transport infrastructure. More specifically, rural land right security increases urbanization more in provinces with poorer road networks. In other words, secure land rights lead to urban concentration and urban non-farm diversification only when it is relatively costly to commute within the province