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Assessing the functioning of land rental markets in Ethiopia

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

Abstract

Although a large theoretical literature discusses the possible inefficiency of sharecropping contracts, the empirical evidence on this phenomenon has been ambiguous at best. Household-level fixed-effect estimates from about 8,500 plots operated by households that 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.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4442.

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Date of creation: 01 Dec 2007
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Handle: RePEc:wbk:wbrwps:4442

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Keywords: Rural Land Policies for Poverty Reduction; Land Use and Policies; Labor Policies; Municipal Housing and Land; Economic Theory&Research;

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References

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  1. Benjamin, Dwayne, 1995. "Can unobserved land quality explain the inverse productivity relationship?," Journal of Development Economics, Elsevier, Elsevier, vol. 46(1), pages 51-84, February.
  2. Bliss, C. J. & Stern, N. H., 1982. "Palanpur: The Economy of an Indian Village," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198284192, October.
  3. Seiichi Fukui, 1997. "The Meaning of Kinship in Sharecropping Contracts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 79(2), pages 394-406.
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  7. Otsuka, Keijiro & Hayami, Yujiro, 1988. "Theories of Share Tenancy: A Critical Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 37(1), pages 31-68, October.
  8. Lanjouw, Jean Olson, 1999. "Information and the operation of markets: tests based on a general equilibrium model of land leasing in India," Journal of Development Economics, Elsevier, Elsevier, vol. 60(2), pages 497-527, December.
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  14. Deininger, Klaus & Ali, Daniel Ayalew & Holden, Stein & Zevenbergen, Jaap, 2008. "Rural Land Certification in Ethiopia: Process, Initial Impact, and Implications for Other African Countries," World Development, Elsevier, Elsevier, vol. 36(10), pages 1786-1812, October.
  15. Gavian, Sarah & Ehui, Simeon, 1999. "Measuring the production efficiency of alternative land tenure contracts in a mixed crop-livestock system in Ethiopia," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 20(1), January.
  16. John Pender & Marcel Fafchamps, 2006. "Land Lease Markets and Agricultural Efficiency in Ethiopia," Journal of African Economies, Centre for the Study of African Economies (CSAE), Centre for the Study of African Economies (CSAE), vol. 15(2), pages 251-284, June.
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  18. Shetty, Sudhir, 1988. "Limited liability, wealth differences and tenancy contracts in agrarian economies," Journal of Development Economics, Elsevier, Elsevier, vol. 29(1), pages 1-22, July.
  19. Shaban, Radwan Ali, 1987. "Testing between Competing Models of Sharecropping," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 95(5), pages 893-920, October.
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Citations

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Cited by:
  1. Jin, Songqing & Deininger, Klaus W., 2007. "Land Rental Markets in the Process of Rural Structural Transformation: Productivity and Equity Impacts from China," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 9932, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Deininger, Klaus & Ali, Daniel Ayalew & Alemu, Tekie, 2008. "Impacts of land certification on tenure security, investment, and land markets : evidence from Ethiopia," Policy Research Working Paper Series 4764, The World Bank.
  3. Deininger, Klaus & Jin, Songqing, 2007. "Land rental markets in the process of rural structural transformation : productivity and equity impacts in China," Policy Research Working Paper Series 4454, The World Bank.
  4. Dokken, Therere, 2013. "Land tenure in Tigray: How large is the gender bias?," CLTS Working Papers, Centre for Land Tenure Studies, Norwegian University of Life Sciences 5/13, Centre for Land Tenure Studies, Norwegian University of Life Sciences.
  5. Headey, Derek D. & Dereje, Mekdim & Ricker-Gilbert, Jacob & Josephson, Anna & Taffesse, Alemayehu Seyoum, 2013. "Land constraints and agricultural intensification in Ethiopia: A village-level analysis of high-potential areas:," IFPRI discussion papers, International Food Policy Research Institute (IFPRI) 1290, International Food Policy Research Institute (IFPRI).
  6. Ayalew Ali, Daniel & Deininger, Klaus, 2012. "Causes and implications of credit rationing in rural Ethiopia : the importance of spatial variation," Policy Research Working Paper Series 6096, The World Bank.
  7. Deininger, Klaus & Ali, Daniel Ayalew & Alemu, Tekie, 2011. "Productivity effects of land rental markets in Ethiopia : Evidence from a matched tenant-landlord sample," Policy Research Working Paper Series 5727, The World Bank.
  8. Place, Frank, 2009. "Land Tenure and Agricultural Productivity in Africa: A Comparative Analysis of the Economics Literature and Recent Policy Strategies and Reforms," World Development, Elsevier, Elsevier, vol. 37(8), pages 1326-1336, August.

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