The Road From Serfdom: Essays in Economic Development and Property Rights

Abstract

This dissertation studies what were the causes of the disappearance of the feudal economic system, and how the emerging modern property right institutions affected economic development.

Chapter 1 summarizes the scope and timeline of the dissertation. It introduces the main concepts related to serfdom and property rights in 19th-century Hungary. It also summarizes the different aspects of land property rights and their effect on land use, and it compares them to my empirical findings.

Chapter 2 examines the disappearance of the feudal land system and the formation of modern land property rights in the Kingdom of Hungary during the 19th century, especially the role that market integration played in this process. I collected data on the so-called textit{land settlements} that were the process of partitioning the farming land and the commons of a village between the landlord and the serfs. This process was the final step in the abolition of serfdom and the creation of modern agricultural production system. I find that establishing the customs union in the Habsburg Empire increased the probability of land settlements in villages in the proximity of Vienna, the the main export market for Hungarian agricultural products. I also find that land settlement happened with higher probability in villages where the distance to railroad decreased the most during this period.

Chapter 3 examines how the disappearance of the feudal property right institutions affected agricultural land use and income using the dataset of the Hungarian land settlements. When creating an instrumental variable, I use the fact that the local knowledge of officials and lawyers were crucial in the speed of land settlement negotiations. Using the variation in the access to lawyers at this time approximated by the village’s distance to the closest law school in the first half of the 19th century, I find that the process of land settlement had contributed to the change in land use. While it decreased the share of arable lands, the increase of the share of vineyards points in the direction of increased investment in land and the shift to higher value added land use. I also find that while the land income did not increase, the income per arable land did.

Chapter 4 examines the effect of cadastral mapping on land use and financial development. I specifically look at the cadastral surveying of the land in the Kingdom of Hungary. The process of cadastral surveying created maps to determine legal boundary of all the landed properties in the country. It took place gradually through the second half of the 19th and the first few years for the 20th century. Hence, some parts of the country were exposed to the land survey much earlier than others. I find that in municipalities that were surveyed earlier, there was an increase in the share of arable lands and a decrease in grazing lands. Using panel data, I also find that there was an increase in the number of financial institutions in regions where cadastral surveying provided better information on land ownership. Moreover, the amount of total financial assets and outstanding mortgages also increased in areas surveyed by the state. One possible explanation is that beside property right security, asymmetric information on potential collaterals is also important in the development of financial system and the credit institutions.