Bruno Caprettini (Universität Zürich)

joint with Lorenzo Casaburi and Miriam Venturini

We study the political consequences of a large land reform in Italy, which transferred more than 800,000 hectares of arable land from large to small owners. Using a spatial regression discontinuity design, we show that the reform benefited the incumbent Christian Democrat party. The electoral benefits persist for four decades, until a major crisis in the Italian political system. We conjecture that the reform generated a cooperative political equilibrium in which voters in treated towns supported the candidates and the agenda of the incumbent party, and the party promoted the interests of these towns. Analysis of fiscal transfers, public sector employment, and referendum voting supports this hypothesis.