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

Formalization always takes place against a backdrop of social institutions. Yet, whether social institutions are an asset or a constraint for formalization remains unclear. We argue that, when offered the opportunity to formalize their land, citizens weigh the benefits of informal insurance against the costs of social institutions. We study a randomized land titling program in a large Congolese city that caused a substantial increase in the demand for and acquisition of land titles. Demand for formalization was more pronounced among citizens who participated more in social institutions and had closer links to city chiefs. In turn, the program crowded out participation in social institutions and worsened citizens’ perceptions of chiefs. These results challenge the view that social institutions are an effective substitute for formal land property rights in urban Africa.