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On The Coexistence of Share, Rent and Wage Contracts in a Rural Economy

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  • Parikshit Ghosh

Abstract

This paper attempts to explain the observed diversity of agricultural con- tracts within close-knit geographical regions, often within the same village. The explanation rests on two main assumptions: heterogeneity in land quality, with landlords being better informed about the quality of their own plots than prospective tenants, and moral hazard problems associated with hired labor. In the process, we also derive a sharp testable relationship between land quality and contractual form-it is predicted that best quality land will be cultivated by the owner, medium grade land will be sharecropped, and poorest quality land will be rented out on a fixed rent basis. A look at some available data largely supports this last prediction.

Suggested Citation

  • Parikshit Ghosh, 1995. "On The Coexistence of Share, Rent and Wage Contracts in a Rural Economy," Boston University - Institute for Economic Development 58, Boston University, Institute for Economic Development.
    • Handle: RePEc:fth:bosecd:58
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    Cited by:

    1. Laha, Arindam & Kuri, Pravat Kumar, 2010. "Rural Credit Market and the Choice of Tenurial Contracts: A Micro Evidence from Rural West Bengal, India," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 33(4), pages 63-83, December.
    2. Lastarria-Cornhiel, Susana & Melmed-Sanjak, Jolyne, 1999. "Land Tenancy In Asia, Africa, And Latin America: A Look At The Past And A View To The Future," Working Papers 12783, University of Wisconsin-Madison, Land Tenure Center.
    3. Ananish Chaudhuri & Pushkar Maitra, 1997. "Determinants of Land Tenure Contracts; Theory and Evidence from Rural India," Departmental Working Papers 199710, Rutgers University, Department of Economics.
    4. Ananish Chaudhuri, 1997. "A Dynamic Model of Contractual Choice in Tenancy," Departmental Working Papers 199711, Rutgers University, Department of Economics.

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