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Efficiency and equity impacts of rural land rental restrictions : evidence from India

Author

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  • Deininger, Klaus
  • Jin, Songqing
  • Nagarajan, Hari K.

Abstract

Recognition of the potentially deleterious implications of inequality in opportunity originating in a skewed asset distribution has spawned considerable interest in land reforms. However, little attention has been devoted to fact that, in the longer term, the measures used to implement land reforms could negatively affect productivity. Use of state level data on rental restrictions, together with a nationally representative survey from India, suggests that, contrary to original intentions, rental restrictions negatively affect productivity and equity. The restrictions reduce the scope for efficiency-enhancing rental transactions that benefit poor producers. Simulations suggest that, by doubling the number of producers with access to land through rental, from about 15 million currently, liberalization of rental markets could have far-reaching impacts.

Suggested Citation

  • Deininger, Klaus & Jin, Songqing & Nagarajan, Hari K., 2007. "Efficiency and equity impacts of rural land rental restrictions : evidence from India," Policy Research Working Paper Series 4324, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4324
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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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