- May 05, 2026
- By Italia Peretti
Land ownership patterns established in the days of homesteaders, railroad tycoons and the relentless westward expansion of the United States into areas taken from Native tribes still influence economic outcomes today, new research from the University of Maryland has found.
In a study published last month in the journal Applied Economics, Cory Smith, an assistant professor in the Department of Agricultural and Resource Economics (AREC), analyzed two very different methods of frontier land distribution: Some was allocated to individual farmers in small plots under the Homestead Act, often around 160 acres per family. But large sections were also granted to railroad companies to sell without limits on size, often resulting in wealthy buyers scooping up thousands of acres.
Because these differing ownership structures often existed next to each other, Smith was able to isolate the impact of ownership type—not just location, land or soil quality. The findings were stark.
Areas that started with more concentrated land ownership still show lower land values today, about 4.5% lower on average. These areas also have about 23% less fixed capital, meaning fewer long-term investments like buildings, irrigation and infrastructure.
“These results push back on the idea that markets naturally fix early imbalances,” Smith said. “Instead, they show that the way land is first distributed can shape what happens for generations.”
The effects show up in how land is used as well. Areas historically owned by railroads and wealthy buyers were less likely to be improved for crop production and more likely to remain in lower-intensity uses like grazing. Even in modern data, those differences are still visible, though smaller than they were in the early 1900s.
Smith’s research tracked outcomes across more than 150 years using millions of land records and historical archives. While some of the gaps between small and large ownership areas narrowed over time, a significant portion remains. In many cases, today’s differences still reflect between 23% and 64% of the original gap.
A big part of the story comes down to incentives, he said. In areas with large landowners, farming was often done by tenants rather than owner-operators. If the person working the land does not fully benefit from improvements, improvements are less likely to happen. Over time, that leads to lower productivity, fewer upgrades and lower land values. The study found that land concentration increased tenant farming rates and made these lower-investment arrangements more common.
Markets diluted this effect somewhat over time, the study found; land was bought and sold, and ownership became less concentrated in some places. Still, those changes happened slowly, and early patterns were not fully undone.
Looking ahead, this work opens up new questions. How do different types of ownership affect environmental outcomes? What happens when similar patterns show up in other countries or in modern land markets? And what kinds of policies actually help close these long-term gaps?
It also has practical implications for nations around the world grappling with concentrated land ownership and considering redistributive land reform, Smith said. Such policies take a huge amount of political capital, and there is debate among economists about whether coercive land reform hurts a nation’s economy more than it helps.
”In that case, the best policy might have been to ensure an equal distribution from the beginning, removing the need for costly interventions in subsequent decades," he said.