Land and Happiness: Land Distribution and Subjective Well-Being in Moldova

The distribution of land rights is a very important economic and political issue, and itplayed a central role in the transition processes in Europe and Asia. This paperanalyzes the impact of the distribution of land on household welfare by usingsubjective well-being (SWB) data from a rural household survey in Moldova, thepoorest country in Europe. The recent land reform in Moldova provides a naturalexperiment on the impact of land ownership distribution on SWB. We find thathousehold land holdings have a positive effect on SWB but neighbours’ averageland holdings have a negative effect on SWB. People, regardless of the landdistribution and even given the relatively low living standards of these households,rate their welfare by looking at how much other people possess. The findings of thepaper have more general implications as it is one of the first attempts to measure theimpact of wealth, rather than income, on SWB.