IDEAS home Printed from https://ideas.repec.org/a/eee/deveco/v83y2007i2p411-445.html
   My bibliography  Save this article

Moral hazard and Marshallian inefficiency: Evidence from Tunisia

Author

Listed:
  • Arcand, Jean-Louis
  • Ai, Chunrong
  • Ethier, Francois

Abstract

In the presence of moral hazard, received agency theory predicts the "Marshallian inefficiency" of agricultural tenancy contracts, meaning that inputs per hectare on sharecropped land will differ from that on owned land. In this paper, we test for the presence of Marshallian inefficiency using a unique data set collected in the Tunisian village of El Oulja in 1993.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Arcand, Jean-Louis & Ai, Chunrong & Ethier, Francois, 2007. "Moral hazard and Marshallian inefficiency: Evidence from Tunisia," Journal of Development Economics, Elsevier, vol. 83(2), pages 411-445, July.
  • Handle: RePEc:eee:deveco:v:83:y:2007:i:2:p:411-445
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0304-3878(06)00108-8
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Russell Davidson & James G. MacKinnon, 2006. "The case against JIVE," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(6), pages 827-833, September.
    2. Thomas, Duncan & Strauss, John, 1997. "Health and wages: Evidence on men and women in urban Brazil," Journal of Econometrics, Elsevier, vol. 77(1), pages 159-185, March.
    3. Donald, Stephen G & Newey, Whitney K, 2001. "Choosing the Number of Instruments," Econometrica, Econometric Society, vol. 69(5), pages 1161-1191, September.
    4. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
    5. Jewitt, Ian, 1988. "Justifying the First-Order Approach to Principal-Agent Problems," Econometrica, Econometric Society, vol. 56(5), pages 1177-1190, September.
    6. Fuss, Melvyn & McFadden, Daniel, 1978. "Production Economics: A Dual Approach to Theory and Applications (II): Applications of the Theory of Production," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 2, number fuss1978a.
    7. Blomquist, Soren & Dahlberg, Matz, 1999. "Small Sample Properties of LIML and Jackknife IV Estimators: Experiments with Weak Instruments," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(1), pages 69-88, Jan.-Feb..
    8. Shaban, Radwan Ali, 1987. "Testing between Competing Models of Sharecropping," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 893-920, October.
    9. Luiz M. Cruz & Marcelo J. Moreira, 2005. "On the Validity of Econometric Techniques with Weak Instruments: Inference on Returns to Education Using Compulsory School Attendance Laws," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).
    10. Fuller, Wayne A, 1977. "Some Properties of a Modification of the Limited Information Estimator," Econometrica, Econometric Society, vol. 45(4), pages 939-953, May.
    11. Donald W. K. Andrews, 1999. "Consistent Moment Selection Procedures for Generalized Method of Moments Estimation," Econometrica, Econometric Society, vol. 67(3), pages 543-564, May.
    12. Bekker, Paul A, 1994. "Alternative Approximations to the Distributions of Instrumental Variable Estimators," Econometrica, Econometric Society, vol. 62(3), pages 657-681, May.
    13. Wooldridge, Jeffrey M., 1995. "Selection corrections for panel data models under conditional mean independence assumptions," Journal of Econometrics, Elsevier, vol. 68(1), pages 115-132, July.
    14. Ekaterini Kyriazidou, 1997. "Estimation of a Panel Data Sample Selection Model," Econometrica, Econometric Society, vol. 65(6), pages 1335-1364, November.
    15. Angrist, J D & Imbens, G W & Krueger, A B, 1999. "Jackknife Instrumental Variables Estimation," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(1), pages 57-67, Jan.-Feb..
    16. Stock, James H & Wright, Jonathan H & Yogo, Motohiro, 2002. "A Survey of Weak Instruments and Weak Identification in Generalized Method of Moments," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(4), pages 518-529, October.
    17. Jean-Jacques Laffont & Mohamed Salah Matoussi, 1995. "Moral Hazard, Financial Constraints and Sharecropping in El Oulja," Review of Economic Studies, Oxford University Press, vol. 62(3), pages 381-399.
    18. Semykina, Anastasia & Wooldridge, Jeffrey M., 2010. "Estimating panel data models in the presence of endogeneity and selection," Journal of Econometrics, Elsevier, vol. 157(2), pages 375-380, August.
    19. Jinyong Hahn & Jerry Hausman & Guido Kuersteiner, 2004. "Estimation with weak instruments: Accuracy of higher-order bias and MSE approximations," Econometrics Journal, Royal Economic Society, vol. 7(1), pages 272-306, June.
    20. Jinyong Hahn & Jerry Hausman, 2002. "A New Specification Test for the Validity of Instrumental Variables," Econometrica, Econometric Society, vol. 70(1), pages 163-189, January.
    21. Andrews, Donald W K, 1989. "Power in Econometric Applications," Econometrica, Econometric Society, vol. 57(5), pages 1059-1090, September.
    22. Braverman, Avishay & Stiglitz, Joseph E, 1982. "Sharecropping and the Interlinking of Agrarian Markets," American Economic Review, American Economic Association, vol. 72(4), pages 695-715, September.
    23. 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.
    24. Hahn, Jinyong & Hausman, Jerry, 2002. "Notes on bias in estimators for simultaneous equation models," Economics Letters, Elsevier, vol. 75(2), pages 237-241, April.
    25. Avishay Braverman & Joseph E. Stiglitz, 1986. "Cost-Sharing Arrangements under Sharecropping: Moral Hazard, Incentive Flexibility, and Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(3), pages 642-652.
    26. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    27. Fuss, Melvyn & McFadden, Daniel (ed.), 1978. "Production Economics: A Dual Approach to Theory and Applications," Elsevier Monographs, Elsevier, edition 1, number 9780444850133.
    28. Ai, Chunrong & Arcand, Jean-Louis & Éthier, François, 1998. "Inefficacité marshallienne, partage de coûts et modèles contractuels avec marchés manquants," L'Actualité Economique, Société Canadienne de Science Economique, vol. 74(3), pages 315-341, septembre.
    29. Jinyong Hahn & Jerry Hausman, 2003. "Weak Instruments: Diagnosis and Cures in Empirical Econometrics," American Economic Review, American Economic Association, vol. 93(2), pages 118-125, May.
    30. Diewert, W E, 1971. "An Application of the Shephard Duality Theorem: A Generalized Leontief Production Function," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 481-507, May-June.
    31. John Shea, 1997. "Instrument Relevance in Multivariate Linear Models: A Simple Measure," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 348-352, May.
    32. Pranab Bardhan & Nirvikar Singh, 1987. "On Moral Hazard and Cost Sharing under Sharecropping," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(2), pages 382-383.
    33. Fuss, Melvyn & McFadden, Daniel, 1978. "Production Economics: A Dual Approach to Theory and Applications (I): The Theory of Production," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 1, number fuss1978.
    34. Harris, Milton & Raviv, Artur, 1979. "Optimal incentive contracts with imperfect information," Journal of Economic Theory, Elsevier, vol. 20(2), pages 231-259, April.
    35. Blackorby, Charles & Diewert, W E, 1979. "Expenditure Functions, Local Duality, and Second Order Approximations," Econometrica, Econometric Society, vol. 47(3), pages 579-601, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. Nida Akram & Muhammad Waqar Akram & Hongshu Wang & Ayesha Mehmood, 2019. "Does Land Tenure Systems Affect Sustainable Agricultural Development?," Sustainability, MDPI, vol. 11(14), pages 1-15, July.
    3. Muhammad Waqar Akram & Nida Akram & Wang Hongshu & Shahla Andleeb & Khalil ur Rehman & Umair Kashif & Ayesha Mehmood, 2019. "Impact of Land Use Rights on the Investment and Efficiency of Organic Farming," Sustainability, MDPI, vol. 11(24), pages 1-18, December.
    4. 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).
    5. Bidisha, Sayema Haque & Hossain, Md. Amzad & Alam, Rubaiyat & Hasan, Md. Mehedi, 2018. "Credit, tenancy choice and agricultural efficiency: Evidence from the northern region of Bangladesh," Economic Analysis and Policy, Elsevier, vol. 57(C), pages 22-32.
    6. Konrad B Burchardi & Selim Gulesci & Benedetta Lerva & Munshi Sulaiman, 2019. "Moral Hazard: Experimental Evidence from Tenancy Contracts," The Quarterly Journal of Economics, Oxford University Press, vol. 134(1), pages 281-347.
    7. 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.
    8. Hagos, Hosaena Gebru & Holden, Stein T., 2013. "Reverse-share-tenancy and Marshallian Inefficiency: Landowners’ bargaining power and sharecroppers’ productivity," IFPRI discussion papers 1270, International Food Policy Research Institute (IFPRI).
    9. Ghebru, Hosaena H. & Holden, Stein T., 2012. "Reverse-Share-Tenancy and Marshallian Inefficiency: Bargaining Power of Landowners and the Sharecropper’s Productivity," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126883, International Association of Agricultural Economists.
    10. Jacoby, Hanan G. & Mansuri, Ghazala, 2009. "Incentives, supervision, and sharecropper productivity," Journal of Development Economics, Elsevier, vol. 88(2), pages 232-241, March.
    11. Hsiao, Cheng & Nugent, Jeffrey & Perrigne, Isabelle & Qiu, Jicheng, 1998. "Shares versus Residual Claimant Contracts: The Case of Chinese TVEs," Journal of Comparative Economics, Elsevier, vol. 26(2), pages 317-337, June.
    12. Ananish Chaudhuri, 1997. "A Dynamic Model of Contractual Choice in Tenancy," Departmental Working Papers 199711, Rutgers University, Department of Economics.
    13. Dubois, Pierre, 2002. "Moral hazard, land fertility and sharecropping in a rural area of the Philippines," Journal of Development Economics, Elsevier, vol. 68(1), pages 35-64, June.
    14. Jean-Louis ARCAND & Mbolatiana DE MONTALEMBERT RAMBONILAZA, 1999. "Is Adverse Selection Relevant? Spence-Mirlees Meets the Tunisian Peasant," Working Papers 199923, CERDI.
    15. Benin, Samuel & Place, Frank & Nkonya, Ephraim M. & Pender, John L., 2006. "Land Markets and Agricultural Land Use Efficiency and Sustainability: Evidence from East Africa," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25645, International Association of Agricultural Economists.
    16. Paltasingh, Kirtti Ranjan & Basantaray, Amit Kumar & Jena, Pabitra Kumar, 2022. "Land tenure security and farm efficiency in Indian agriculture: Revisiting an old debate," Land Use Policy, Elsevier, vol. 114(C).
    17. Claudio ARAUJO & Catherine ARAUJO BONJEAN & Jean-Louis ARCAND, 1999. "Capital humain, productivité agricole, et travail féminin : variables latentes et séparabilité dans les modèles de ménage," Working Papers 199912, CERDI.
    18. Nasim, Sanval & Helfand, Steven & Dinar, Ariel, 2020. "Groundwater management under heterogeneous land tenure arrangements," Resource and Energy Economics, Elsevier, vol. 62(C).
    19. Xinjian Chen & Di Zeng & Ying Xu & Xiaojun Fan, 2018. "Perceptions, Risk Attitude and Organic Fertilizer Investment: Evidence from Rice and Banana Farmers in Guangxi, China," Sustainability, MDPI, vol. 10(10), pages 1-14, October.
    20. Jean-Louis ARCAND & CONNING & ETHIER, 1999. "Class position and Economic Behavior in a Tunisian Village: Selective Separability in a Multi-Factor Household Model," Working Papers 199911, CERDI.
    21. Narayan Das & Alain de Janvry & Elisabeth Sadoulet, 2019. "Credit and Land Contracting: A Test of the Theory of Sharecropping," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(4), pages 1098-1114.
    22. Bellemare, Marc F., 2010. "Insecure Land Rights and Share Tenancy in Madagascar," MPRA Paper 23640, University Library of Munich, Germany.
    23. Niee Foning, Maxime & Kane, Gilles Quentin & Ambagna, Jean Joël & Fondo, Sikod & Abayomi Oyekale, Samuel, 2013. "The effect of incomplete land tenure contracts on agricultural investment and productivity in Cameroon," MPRA Paper 62752, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guilhem Bascle, 2008. "Controlling for endogeneity with instrumental variables in strategic management research," Post-Print hal-00576795, HAL.
    2. Nam-Hyun Kim & Winfried Pohlmeier, 2015. "A Regularization Approach to Biased Two-Stage Least Squares Estimation," Working Paper series 15-22, Rimini Centre for Economic Analysis.
    3. Markus Frölich & Michael Lechner, 2004. "Regional treatment intensity as an instrument for the evaluation of labour market policies," University of St. Gallen Department of Economics working paper series 2004 2004-08, Department of Economics, University of St. Gallen.
    4. Emma M. Iglesias & Garry D. A. Phillips, 2012. "Almost Unbiased Estimation in Simultaneous Equation Models With Strong and/or Weak Instruments," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 30(4), pages 505-520, June.
    5. Namhyun Kim & Winfried Pohlmeier, 2016. "A Note on the Regularized Approach to Biased 2SLS Estimation with Weak Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(6), pages 915-924, December.
    6. Daniel A. Ackerberg & Paul J. Devereux, 2009. "Improved JIVE Estimators for Overidentified Linear Models with and without Heteroskedasticity," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 351-362, May.
    7. Alexandre Dmitriev, 2013. "Institutions and growth: evidence from estimation methods robust to weak instruments," Applied Economics, Taylor & Francis Journals, vol. 45(13), pages 1625-1635, May.
    8. Léandre BASSOLE & Jean-Louis ARCAND, 2006. "Does Community Driven Development Work? Evidence from Senegal," Working Papers 200606, CERDI.
    9. Dufour, Jean-Marie & Taamouti, Mohamed, 2007. "Further results on projection-based inference in IV regressions with weak, collinear or missing instruments," Journal of Econometrics, Elsevier, vol. 139(1), pages 133-153, July.
    10. Alfonso Flores-Lagunes, 2007. "Finite sample evidence of IV estimators under weak instruments," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(3), pages 677-694.
    11. Hausman, Jerry & Stock, James H. & Yogo, Motohiro, 2005. "Asymptotic properties of the Hahn-Hausman test for weak-instruments," Economics Letters, Elsevier, vol. 89(3), pages 333-342, December.
    12. Bekker, Paul A. & Crudu, Federico, 2015. "Jackknife instrumental variable estimation with heteroskedasticity," Journal of Econometrics, Elsevier, vol. 185(2), pages 332-342.
    13. Eswaramoorthy, K., 1991. "U.S. livestock production and factor demand: a multiproduct dynamic dual approach," ISU General Staff Papers 1991010108000010523, Iowa State University, Department of Economics.
    14. Xuexin WANG, 2021. "Instrumental variable estimation via a continuum of instruments with an application to estimating the elasticity of intertemporal substitution in consumption," Working Papers 2021-11-06, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    15. John Chao & Jerry Hausman & Whitney Newey & Norman Swanson & Tiemen Woutersen, 2013. "Combining Two Consistent Estimators," Departmental Working Papers 201310, Rutgers University, Department of Economics.
    16. Crompton, Paul & Lesourd, Jean-Baptiste, 2008. "Economies of scale in global iron-making," Resources Policy, Elsevier, vol. 33(2), pages 74-82, June.
    17. Russell Davidson & James G. MacKinnon, 2006. "The case against JIVE," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(6), pages 827-833, September.
    18. Matsushita, Yukitoshi & Otsu, Taisuke, 2022. "A jackknife Lagrange multiplier test with many weak instruments," LSE Research Online Documents on Economics 116392, London School of Economics and Political Science, LSE Library.
    19. Bekker, Paul A. & Lawford, Steve, 2008. "Symmetry-based inference in an instrumental variable setting," Journal of Econometrics, Elsevier, vol. 142(1), pages 28-49, January.
    20. John C. Chao & Norman R. Swanson, 2005. "Consistent Estimation with a Large Number of Weak Instruments," Econometrica, Econometric Society, vol. 73(5), pages 1673-1692, September.

    More about this item

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:deveco:v:83:y:2007:i:2:p:411-445. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/locate/devec .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/devec .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.