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Land Lease Markets and Agricultural Efficiency: Theory and Evidence from Ethiopia Author info | Abstract | Publisher info | Download info | Related research | Statistics John Pender (International Food Policy Research Institute, Washington D.C.)
Marcel Fafchamps (Centre for the Study of African Economies)
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In this paper, we develop a theoretical model of land leasing that includes transaction costs, risk pooling motives and non-tradable productive inputs, and investigate the empirical implications of land contracts using data collected from four villages in Ethiopia. We show that sharecropping is the dominant contract if transaction costs are negligible, but that a rental contract may arise if transaction costs decrease with increasing the tenant’s share of output. When this is the case, the theory predicts that area operated by tenants will be an increasing function of their land endowment and that fixed rental contracts will be more likely in situations where transaction costs are higher. We find empirical support for these predictions in the villages studied. We also find that input of labor per hectare is about 25% lower on sharecropped than on other land tenure types, but that the differences in total value of inputs, outputs and profits per hectare are statistically insignificant and relatively small in magnitude. These results support the Marshallian argument that sharecropping reduces labor effort, but also support the “New School” perspective since the magnitude of the inefficiency is relatively small. A bigger source of inefficiency (and inequity) in the study villages appears to be the limited lease market for oxen services, together with credit constraints that limit the ability of land and oxen poor households to purchase oxen.
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Paper provided by EconWPA in its series Development and Comp Systems with number
0409021.
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Length: 52 pages
Date of creation: 22 Sep 2004Date of revision:
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Keywords: land lease markets ; land tenure ; sharecropping ; agricultural efficiency ; Other versions of this item:
Paper Pender, John L. & Fafchamps, Marcel, 2001.
"Land lease markets and agricultural efficiency: theory and evidence from Ethiopia ,"
EPTD discussion papers
81, International Food Policy Research Institute (IFPRI).
[Downloadable!] Pender, John & Fafchamps, Marcel, 2002.
"Land Lease Markets And Agricultural Efficiency: Theory And Evidence From Ethiopia ,"
2002 Annual meeting, July 28-31, Long Beach, CA
19796, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
[Downloadable!] Find related papers by JEL classification: O - Economic Development, Technological Change, and Growth P - Economic Systems
This paper has been announced in the following NEP Reports :
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Pender, John L. & Fafchamps, Marcel, 2001.
"Land lease markets and agricultural efficiency: theory and evidence from Ethiopia ,"
EPTD discussion papers
81, International Food Policy Research Institute (IFPRI).
[Downloadable!]
Other versions:
John Pender & Marcel Fafchamps, 2004.
"Land Lease Markets and Agricultural Efficiency: Theory and Evidence from Ethiopia ,"
Development and Comp Systems
0409021, EconWPA.
[Downloadable!] Pender, John & Fafchamps, Marcel, 2002.
"Land Lease Markets And Agricultural Efficiency: Theory And Evidence From Ethiopia ,"
2002 Annual meeting, July 28-31, Long Beach, CA
19796, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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"Land Lease Markets And Agricultural Efficiency: Theory And Evidence From Ethiopia ,"
2002 Annual meeting, July 28-31, Long Beach, CA
19796, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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