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The effects of agrarian contracts of a governmental intervention into bonded labor in the western terai of Nepal

  • Magnus Hatlebakk

We study an effective intervention into a specific form of bonded labor. The intervention led to a shift in agrarian contracts, from bonded labor to sharecropping. By comparing the pre- and post-liberation contracts we evaluate theoretical models of agrarian contracts. We suggest three mechanisms that jointly explain why landlords offered bonded labor contracts pre-liberation. One mechanism we apply to define bonded labor in contrast to tied labor. The mechanism, where the outside option as casual labor is endogenously determined by the choice of long-term contract, implies a trade-off for the landlord between efficiency and redistribution of surplus.

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Paper provided by CMI (Chr. Michelsen Institute), Bergen, Norway in its series CMI Working Papers with number WP 2006: 6.

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Length: 40 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:chm:wpaper:wp2006-6
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  1. Bardhan, Pranab K, 1983. "Labor-Tying in a Poor Agrarian Economy: A Theoretical and Empirical Analysis," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 501-14, August.
  2. Allen, Franklin, 1985. "On the Fixed Nature of Sharecropping Contracts," Economic Journal, Royal Economic Society, vol. 95(377), pages 30-48, March.
  3. Stiglitz, Joseph E, 1974. "Incentives and Risk Sharing in Sharecropping," Review of Economic Studies, Wiley Blackwell, vol. 41(2), pages 219-55, April.
  4. Hatlebakk, Magnus, 2002. "A new and robust subgame perfect equilibrium in a model of triadic power relations," Journal of Development Economics, Elsevier, vol. 68(1), pages 225-232, June.
  5. Schaffner, Julie Anderson, 1995. "Attached farm labor, limited horizons and servility," Journal of Development Economics, Elsevier, vol. 47(2), pages 241-270, August.
  6. Shetty, Sudhir, 1988. "Limited liability, wealth differences and tenancy contracts in agrarian economies," Journal of Development Economics, Elsevier, vol. 29(1), pages 1-22, July.
  7. Genicot, Garance, 2002. "Bonded labor and serfdom: a paradox of voluntary choice," Journal of Development Economics, Elsevier, vol. 67(1), pages 101-127, February.
  8. Bardhan, Pranab K, 1980. "Interlocking Factor Markets and Agrarian Development: A Review of Issues," Oxford Economic Papers, Oxford University Press, vol. 32(1), pages 82-98, March.
  9. Hatlebakk, Magnus, 2004. "Attached Labor in Nepal: A Field-Study of Landlord-Labor Relations that are Misrepresented in the Nepal-LSMS data," Working Papers in Economics 02/04, University of Bergen, Department of Economics.
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