Do squatters "squeeze" legal land holders?

A paper from the upcoming AEA meeting caught my eye. Jan Bruckner of UC Irvine and Harris Selod have a new paper where they model the decisions of squatters. There isn't much good work that I am aware of on the issues of squatters, and this one models something I hadn't thought about: do squatters raise the price of formal land?

The theory goes like this: squatters make an optimal choice of land to use up by balancing their costs with the increase in prices they spillover to the formal land owners, making sure not to raise prices too high lest they become targeted by the police for eviction. In the model it is assumed that squatters raise prices, but do they really? Most squatters take up very marginal land, and in most areas have such low legal standing they can be pushed off at anytime their land is considered of value. If they do raise prices, how much are they responsible for increasing is then an empirical question.

Being back in Uganda for a few weeks got me to thinking that northern Uganda would offer an interesting possibility to test this part of the model. As many people in the north were forced into IDP camps, some very close to, or actually in cities, they are essentially squatters. That they were forced to move solves the serious endogeneity concern of whether they increased land prices, or if land prices caused them to squat in the first place.

I still need to look into this a little more as I am not sure I can get the data I need. I'll need land prices in cities before and after the forced movement, as well as figure out ways to control for increased service provision from the extra people and general growth in the city. I have some ideas, but still very sketchy.