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Land Rental in Ethiopia: Marshallian Inefficiency or Factor Market Imperfections and Tenure Insecurity as Binding Constraints?

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  • Deininger, Klaus W.
  • Ali, Daniel Ayalew
  • Alemu, Tekie

Abstract

Although a large theoretical literature discusses the possible inefficiency of sharecropping contracts, empirical evidence on this phenomenon has been ambiguous at best. Household level fixed-effect estimates from about 8,500 plots operated by households who own and sharecrop land in the Ethiopian highlands provide support for the hypothesis of Marshallian inefficiency. At the same time, a factor adjustment model suggests that the extent to which rental markets allow households to attain their desired operational holding size is extremely limited. Our analysis points towards factor market imperfections (no rental for oxen), lack of alternative employment opportunities, and tenure insecurity as possible reasons underlying such behavior, suggesting that, rather than worrying almost exclusively about Marshallian inefficiency, it is equally warranted to give due attention to the policy framework within which land rental markets operate.

Suggested Citation

  • Deininger, Klaus W. & Ali, Daniel Ayalew & Alemu, Tekie, 2007. "Land Rental in Ethiopia: Marshallian Inefficiency or Factor Market Imperfections and Tenure Insecurity as Binding Constraints?," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 9860, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea07:9860
    DOI: 10.22004/ag.econ.9860
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    Cited by:

    1. Takada, Jun & Shuto, Hisato, 2023. "Causal linkages between land reform and factor demand under tenure insecurity: Evidence from Amhara Region, Ethiopia," Land Use Policy, Elsevier, vol. 128(C).
    2. Bosco Bashangwa Mpozi & Mireille Mizero & Andrew Ogolla Egesa & Paul M. Dontsop Nguezet & Bernard Vanlauwe & Patrice Ndimanya & Philippe Lebailly, 2020. "Land Access in the Development of Horticultural Crops in East Africa. A Case Study of Passion Fruit in Burundi, Kenya, and Rwanda," Sustainability, MDPI, vol. 12(7), pages 1-18, April.
    3. Katrina Kosec & Hosaena Ghebru & Brian Holtemeyer & Valerie Mueller & Emily Schmidt, 2018. "The Effect of Land Access on Youth Employment and Migration Decisions: Evidence from Rural Ethiopia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(3), pages 931-954.

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    Keywords

    Land Economics/Use;

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