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Livestock and Land Share Contracts in a Hindu Society

  • Aryal, Jeetendra P.

    ()

    (PhD Climate Economist-South Asia CIMMYT, WTC building IARI campus, Room no. 223-24, 2nd floor, Pusa Campus)

  • Holden, Stein T.

    ()

    (Norwegian University of Life Sciences (UMB))

This paper examines factors related to the existence of a livestock rental market in western Nepal and assesses whether this is associated with caste differentiation and land rental market participation. This study brings new empirical evidence of livestock rental market against the established view that such market does not exist due to moral hazard. Theoretical models for asset- rich (high-caste) households, rich in land and livestock, and asset-poor (low-caste) households are presented providing logical explanations for the existence of a livestock rental market and synergies between livestock and land rental market participation. A combination of double hurdle models and bivariate ordered probit models were applied to test the implications of the models. The empirical evidence was found to be consistent with the theoretical models. Land- and livestock-rich (high-caste) households were more likely to rent out land and/or livestock. Land- and livestock-poor and credit constrained (low-caste) households were more likely to rent in livestock and land. Participation in the two markets was positively correlated indicating synergies that may be due to production and transaction cost reducing benefits. The male labor endowment, partly determined by migration, was a major determinant of livestock rental behavior.

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File URL: http://www.umb.no/statisk/clts/papers/CLTS_WP7_2011.pdf
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Paper provided by Centre for Land Tenure Studies, Norwegian University of Life Sciences in its series CLTS Working Papers with number 7/11.

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Length: 38 pages
Date of creation: 07 Jun 2011
Date of revision:
Handle: RePEc:hhs:nlsclt:2011_007
Contact details of provider: Postal: Centre for Land Tenure Studies, Norwegian University of Life Sciences, P.O. Box 5003, NO-1432 Aas, Norway
Phone: (+47) 6496 5700
Fax: (+47) 6494 3012
Web page: http://www.umb.no/clts
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  1. Ram Acharya & Robert Ekelund, 1998. "Mixed and pure sharecropping in Nepal: empirical evidence supporting the traditional hypothesis," Applied Economics, Taylor & Francis Journals, vol. 30(1), pages 37-50.
  2. Ayalneh Bogale & Benedikt Korf, 2007. "To share or not to share? (non-)violence, scarcity and resource access in Somali Region, Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 43(4), pages 743-765.
  3. Banerjee, Biswajit & Knight, J. B., 1985. "Caste discrimination in the Indian urban labour market," Journal of Development Economics, Elsevier, vol. 17(3), pages 277-307, April.
  4. Vuong, Quang H, 1989. "Likelihood Ratio Tests for Model Selection and Non-nested Hypotheses," Econometrica, Econometric Society, vol. 57(2), pages 307-33, March.
  5. McPeak, John, 2006. "Confronting the risk of asset loss: What role do livestock transfers in northern Kenya play?," Journal of Development Economics, Elsevier, vol. 81(2), pages 415-437, December.
  6. Menale Kassie & Stein Holden, 2007. "Sharecropping efficiency in Ethiopia: threats of eviction and kinship," Agricultural Economics, International Association of Agricultural Economists, vol. 37(2-3), pages 179-188, 09.
  7. Ito, Takahiro, 2009. "Caste discrimination and transaction costs in the labor market: Evidence from rural North India," Journal of Development Economics, Elsevier, vol. 88(2), pages 292-300, March.
  8. Daniel A. Ackerberg & Maristella Botticini, 1999. "Endogenous Matching and the Empirical Determinants of Contract Form," Boston University - Institute for Economic Development 92, Boston University, Institute for Economic Development.
  9. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Harvard Institute of Economic Research Working Papers 1727, Harvard - Institute of Economic Research.
  10. Hatlebakk, Magnus & Iversen, Vegard & Torsvik, Gaute, 2011. "Caste, local networks and lucrative jobs: Evidence from rural Nepal," Working Papers in Economics 01/11, University of Bergen, Department of Economics.
  11. Holden, Stein & Shiferaw, Bekele, 2004. "Land degradation, drought and food security in a less-favoured area in the Ethiopian highlands: a bio-economic model with market imperfections," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 30(1), January.
  12. Allen, Douglas W & Lueck, Dean, 1999. "The Role of Risk in Contract Choice," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(3), pages 704-36, October.
  13. Otsuka, Keijiro, 2007. "Efficiency and Equity Effects of Land Markets," Handbook of Agricultural Economics, Elsevier.
  14. Lin, Tsai-Fen & Schmidt, Peter, 1984. "A Test of the Tobit Specification against an Alternative Suggested by Cragg," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 174-77, February.
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