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Land Rental Markets: Experimental Evidence from Kenya

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  • Michelle Acampora
  • Lorenzo Casaburi
  • Jack Willis

Abstract

Do land market frictions cause misallocation in agriculture? In a field experiment in western Kenya, we randomly subsidize owners to rent out land. Induced rentals mostly persist after the subsidy ends and increase output and value added, consistent with misallocation. Gains from trade arise from renters choosing higher-value crops, having higher productivity, and adopting more nonlabor inputs, while renters use similar quantities of labor as owners. Induced rentals are not those with the largest predicted gains, underlining the importance of the joint distribution of gains and frictions, with frictions arising from search, risk, and learning.

Suggested Citation

  • Michelle Acampora & Lorenzo Casaburi & Jack Willis, 2025. "Land Rental Markets: Experimental Evidence from Kenya," American Economic Review, American Economic Association, vol. 115(3), pages 727-771, March.
    • Handle: RePEc:aea:aecrev:v:115:y:2025:i:3:p:727-71
    DOI: 10.1257/aer.20221234
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    References listed on IDEAS

    as
    1. Chaoran Chen & Diego Restuccia & Raül Santaeulàlia-Llopis, 2023. "Land Misallocation and Productivity," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 441-465, April.
    2. Dillon, Brian & Barrett, Christopher B., 2017. "Agricultural factor markets in Sub-Saharan Africa: An updated view with formal tests for market failure," Food Policy, Elsevier, vol. 67(C), pages 64-77.
    3. Alexandre Belloni & Victor Chernozhukov & Christian Hansen, 2014. "Inference on Treatment Effects after Selection among High-Dimensional Controlsâ€," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(2), pages 608-650.
    4. Akos Valentinyi & Berthold Herrendorf, 2008. "Measuring Factor Income Shares at the Sector Level," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 820-835, October.
    5. Binswanger-Mkhize, Hans P. & Savastano, Sara, 2017. "Agricultural intensification: The status in six African countries," Food Policy, Elsevier, vol. 67(C), pages 26-40.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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