Surplus labour and structural transformation after land dispossession

We are pleased to invite you to the first seminar of this year’s SOAS Economics Seminar Series. Our first speaker will be Ihsaan Bassier, who will present his co-authored work on “Surplus labour and structural transformation after land dispossession".

What explains the widespread and persistent surplus labour with structural transformation? While many explanations focus on the demand-side through formal sector expansion, we study how the 'push'  factor of land dispossession removes subsistence options, thereby prompting migration in search of jobs even at increased risk of unemployment. Although this dimension of dispossession has been explored in other literatures, we quantify its magnitude and  persistent long-run impact using empirical tools and incorporate this mechanism into economic models of structural transformation.

We first consider South Africa, which has a history of extreme land dispossession and unemployment. An estimated 3.5 million people were forcibly removed during Apartheid, of whom around 2 million were displaced from rural areas. We focus on these Apartheid-era forced removals of about 15% of the population, by digitizing detailed historical records of these removals, geo-locating removal sites, and linking it to census data. We find that these removals have enduringly shaped labour market and structural transformation process in South Africa today. Our reduced-form empirical analysis finds that people from forcibly relocated sites, relative to those in comparable areas, were more likely to migrate, and had higher rates of both wage employment and unemployment.

We then formalize this mechanism in a modified Harris-Todaro framework of structural transformation to generate generalizable insights. To examine its relevance beyond South Africa, we compile land inequality data from over 100 countries' agricultural censuses (covering over half the world's population). We find that land inequality associated with histories of colonial land dispossession correlates well with lower self-employed agriculture and higher labour surplus. A model-fitting exercise further validates the importance of this mechanism in the data. These findings suggest that land dispossession can durably reshape labour allocation during structural transformation process by weakening subsistence options and generating persistent surplus labour. 

Co-authors: Joshua Budlender and Surbhi Kesar.

Header image credit: Gautier Pfeiffer via Unsplash.