Small Farms, Large Transaction Costs: Incomplete Property Rights and Structural Change in Haiti

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Many developing countries are stuck in small, low-productivity farms. Such countries also have poor property rights institutions, which create transaction costs towards reallocating land to large farms. I look at how transaction costs from historical property rights institutions affected the agricultural structure of Haiti, the poorest country in the Western Hemisphere. Using new data on farms created in Haiti from 1928 to 1950, I find transaction costs prevented farmers from starting large farms. Furthermore, transaction costs stopped Haiti from developing plantations in response to a labor supply shock caused by the Trujillo Massacre in the Dominican Republic.

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