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Participation and Contract Choice in the Tenancy Market

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  • Sharmina Ahmed
  • Christopher Findlay

Abstract

Though sharecropping remains widespread, its determinants are still poorly understood and the debate over the extent of risk-sharing and moral hazard is far from settled. Moreover, existing empirical study very often plague by selection problem. We address both issues using data from rural Bangladesh. This paper tested a model empirically where the leasing decision and contract choice are simultaneous. A modified Heckman model is estimated which avoids the selectivity bias of observed contracts. Empirical tests reject the hypothesis of pure risk sharing and a wide range of support for the presence of moral hazard problem in the choice of contracts.

Suggested Citation

  • Sharmina Ahmed & Christopher Findlay, 2012. "Participation and Contract Choice in the Tenancy Market," EERI Research Paper Series EERI_RP_2012_04, Economics and Econometrics Research Institute (EERI), Brussels.
    • Handle: RePEc:eei:rpaper:eeri_rp_2012_04
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    File URL: http://www.eeri.eu/documents/wp/EERI_RP_2012_04.pdf
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    References listed on IDEAS

    as
    1. Jin, Songqing & Deininger, Klaus, 2009. "Land rental markets in the process of rural structural transformation: Productivity and equity impacts from China," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 629-646, December.
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    6. Jean-Jacques Laffont & Mohamed Salah Matoussi, 1995. "Moral Hazard, Financial Constraints and Sharecropping in El Oulja," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 62(3), pages 381-399.
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    More about this item

    Keywords

    Contract choice; Heckman model; Moral hazard; Risk; Sharecropping.;
    All these keywords.

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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