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Assessing the functioning of land rental markets in Ethiopia

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  • Deininger, Klaus
  • Ali, Daniel Ayalew
  • Alemu, Tekie

Abstract

Although a large theoretical literature discusses the possible inefficiency of sharecropping contracts, the empirical evidence on this phenomenon has been ambiguous at best. Household-level fixed-effect estimates from about 8,500 plots operated by households that own and sharecrop land in the Ethiopian highlands provide support for the hypothesis of Marshallian inefficiency. At the same time, a factor adjustment model suggests that the extent to which rental markets allow households to attain their desired operational holding size is extremely limited. Our analysis points towards factor market imperfections (no rental for oxen), lack of alternative employment opportunities, and tenure insecurity as possible reasons underlying such behavior, suggesting that, rather than worrying almost exclusively about Marshallian inefficiency, it is equally warranted to give due attention to the policy framework within which land rental markets operate.

Suggested Citation

  • Deininger, Klaus & Ali, Daniel Ayalew & Alemu, Tekie, 2007. "Assessing the functioning of land rental markets in Ethiopia," Policy Research Working Paper Series 4442, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4442
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    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. Kibrom A. Abay & Goytom A. Kahsay & Guush Berhane, 2018. "Social Networks and Factor Markets: Panel Data Evidence from Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 54(1), pages 174-190, January.
    3. Headey, Derek & Dereje, Mekdim & Taffesse, Alemayehu Seyoum, 2014. "Land constraints and agricultural intensification in Ethiopia: A village-level analysis of high-potential areas," Food Policy, Elsevier, vol. 48(C), pages 129-141.
    4. Hanane Sharif Ahmed, 2017. "Gender and rural land reform in Ethiopia: reform process, tenure security, and investment," Economics PhD Theses 0417, Department of Economics, University of Sussex Business School.
    5. Deininger, Klaus & Ali, Daniel Ayalew & Alemu, Tekie, 2008. "Impacts of land certification on tenure security, investment, and land markets : evidence from Ethiopia," Policy Research Working Paper Series 4764, The World Bank.
    6. Crelis Rammelt, 2018. "Infrastructures as Catalysts: Precipitating Uneven Patterns of Development from Large-Scale Infrastructure Investments," Sustainability, MDPI, vol. 10(4), pages 1-15, April.
    7. Abay, Kibrom A. & Chamberlin, Jordan & Berhane, Guush, 2021. "Are land rental markets responding to rising population pressures and land scarcity in sub-Saharan Africa?," Land Use Policy, Elsevier, vol. 101(C).
    8. Tan, Shu-hao & Zhang, Ru-xin & Tan, Zhong-chun, 2018. "Grassland rental markets and herder technical efficiency: ability effect or resource equilibration effect?," Land Use Policy, Elsevier, vol. 77(C), pages 135-142.
    9. Mertens, Kewan & Vranken, Liesbet, 2021. "Pro-poor land transfers in the presence of landslides: New insights on norms in land markets," Land Use Policy, Elsevier, vol. 101(C).
    10. 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.
    11. Dokken, Therere, 2013. "Land tenure in Tigray: How large is the gender bias?," CLTS Working Papers 5/13, Norwegian University of Life Sciences, Centre for Land Tenure Studies, revised 10 Oct 2019.
    12. Deininger, Klaus & Hilhorst, Thea & Songwe, Vera, 2014. "Identifying and addressing land governance constraints to support intensification and land market operation: Evidence from 10 African countries," Food Policy, Elsevier, vol. 48(C), pages 76-87.
    13. Crelis F. Rammelt & Maarten Van Schie & Fredu Nega Tegabu & Maggi Leung, 2017. "Vaguely Right or Exactly Wrong: Measuring the (Spatial) Distribution of Land Resources, Income and Wealth in Rural Ethiopia," Sustainability, MDPI, vol. 9(6), pages 1-19, June.
    14. Deininger, Klaus & Jin, Songqing, 2007. "Land rental markets in the process of rural structural transformation : productivity and equity impacts in China," Policy Research Working Paper Series 4454, The World Bank.
    15. Alia, Didier & Kusunose, Yoko & Theriault, Veronique, 2016. "Land rental, farm investment, productivity, and efficiency in Burkina Faso," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236169, Agricultural and Applied Economics Association.
    16. Place, Frank, 2009. "Land Tenure and Agricultural Productivity in Africa: A Comparative Analysis of the Economics Literature and Recent Policy Strategies and Reforms," World Development, Elsevier, vol. 37(8), pages 1326-1336, August.
    17. World Bank Group, "undated". "Africa's Pulse, No. 18, October 2018," World Bank Publications - Reports 30455, The World Bank Group.
    18. Ayalew Ali, Daniel & Deininger, Klaus, 2012. "Causes and implications of credit rationing in rural Ethiopia : the importance of spatial variation," Policy Research Working Paper Series 6096, The World Bank.

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    Keywords

    Rural Land Policies for Poverty Reduction; Land Use and Policies; Labor Policies; Municipal Housing and Land; Economic Theory&Research;
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