Property Rights and Social Institutions: How Informal Institutions and Chiefs Shape Land Formalization in Urban Africa

Abstract

What promotes property rights formalization in weak states? This paper studies a randomized land titling program in a large city in the D.R. Congo that cut the price and transaction costs of formal land titles. The program caused a 44 percentage-point increase in the demand for land titles and a 13.7 percentage-point increase in their acquisition. In the context of this experiment, we study the relationship between program take-up and social institutions. We find that, conditional on being assigned to the program, citizens who are more engaged with horizontal social institutions---such as churches, mutual aid societies, and rotating credit and savings associations---and those who are closer to local elites known as city chiefs are more likely to demand formal titles. In turn, chiefs' political connections depress titling. We then study the effects of the program and show that it crowded out participation in social institutions and negatively impacted perceptions of chiefs. These results provide evidence against the view that social institutions are an effective substitute for formal land property rights. Drawing on a richer conception of social institutions, we propose that these are, at best, imperfect substitutes for formal property rights. By contrast, in peripheral areas, titling patterns seem to follow a substitution logic.