This dissertation explores the interconnection between land ownership inequality and functioning of rural factor markets in Turkey. It investigates the effectiveness and efficiency of land and labor markets in generating and distributing economic opportunities within agriculture and, thereby, in reducing rural inequality. In addition, the dissertation examines allocative efficiency in Turkish agriculture by testing for an inverse size-yield relationship across farms, and by econometric analysis of the economic and social determinants of participation in tenancy and labor markets. I combine historical, empirical and theoretical investigation to produce an analysis of the functioning of rural factor markets, focusing on the effects of land ownership inequality on rural factor markets in Turkey.

In investigating labor and land relations through factor markets, the first important finding of this research is the evidence of tremendous amount of inequality in incomes, land ownership and rural factor market participation. In order to understand how this inequality comes about and affects markets I investigate four important issues. First, I look at the utilization of land and labor resources by looking at inverse size yield relationship in Turkish agriculture. Inverse size yield relationship suggests that as farm size gets smaller yield per acre gets larger. Second, I use a maximum likelihood estimation to investigate the determinants of land and labor market participation. Third, I look at the link between land ownership inequality and market failure via formulating an index, which is utilized as a measure and account of market malfunctioning. Market malfunctioning, is a normatively defined index which looks at the deviation of measured inequalities of incomes relative to the inequality that would prevail under neoclassical markets.

One of the most important findings of this dissertation is a strong evidence for inverse size yield relationship in Turkish agriculture, which reflects the inability of rural markets to mediate effectively between land owners and labor suppliers. In addition, findings of this research suggest that unequal distribution of agricultural assets, most importantly owned land is instrumental in the ability of markets to offer economic opportunities and allocate resources efficiently.