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Agrarian Land Tenancy In Prewar Japan: Contract Choice And Implications On Productivity

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  • Yutaka ARIMOTO
  • Tetsuji OKAZAKI
  • Masaki NAKABAYASHI

Abstract

We study the tenancy contract choice and its impact on productivity in the prewar Japanese agriculture, where a unique contractual form, the rent‐reduction contract, was predominant. Theoretically, this contract is more efficient than share tenancy or fixed‐rent contract in terms of provision of incentives and risk‐sharing, and thus raises the question of why such an efficient contract was uncommon outside Japan. We argue that transaction costs on the execution of rent reduction were the key element in the adoption of this contract. In prewar Japan, local communities played some role in governing the process of rent reduction and mitigated such costs. Thus the study proposes transaction costs and institutions as additional determinant of tenancy contract choice. We also find that higher prevalence of tenancy was associated with lower average rice yield at the prefectural level and such correlation was stronger in prefectures with a greater proportion of share tenancy.

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  • Yutaka ARIMOTO & Tetsuji OKAZAKI & Masaki NAKABAYASHI, 2010. "Agrarian Land Tenancy In Prewar Japan: Contract Choice And Implications On Productivity," The Developing Economies, Institute of Developing Economies, vol. 48(3), pages 293-318, September.
    • Handle: RePEc:bla:deveco:v:48:y:2010:i:3:p:293-318
    DOI: 10.1111/j.1746-1049.2010.00109.x
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    Cited by:

    1. Taisuke Takayama & Hirotaka Matsuda & Tomoaki Nakatani & Kuniaki Saito, 2022. "Do partial land rights increase productivity and investment? evidence from the redistributive land reform in post–world war II Japan," The Developing Economies, Institute of Developing Economies, vol. 60(2), pages 77-100, June.
    2. NAKABAYASHI, Masaki, 2008. "Tenant, Landlord, and Risk: Revisiting the Debate on Japanese Capitalism," ISS Discussion Paper Series (series F) f144, Institute of Social Science, The University of Tokyo, revised 27 Aug 2019.
    3. Yutaka Arimoto & Yoshihiro Sakane, 2021. "Agricultural development in industrialising Japan, 1880–1940," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 61(3), pages 290-317, November.
    4. Aditi Dixit & Elise van Nederveen Meerkerk, 2022. "Supply of labour during early industrialisation: Agricultural systems, textile factory work and gender in Japan and India, ca. 1880–1940," The Indian Economic & Social History Review, , vol. 59(2), pages 223-255, April.
    5. J. Mark Ramseyer, 2015. "The Fable of Land Reform: Leases and Credit Markets in Occupied Japan," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(4), pages 934-957, October.

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