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Does sharecropping affect productivity and long-term investment ? evidence from West Bengal's tenancy reforms

  • Deininger, Klaus
  • Jin, Songqing
  • Yadav, Vandana

Although transfer of agricultural land ownership through land reform had positive impacts on productivity, investment, and political empowerment in many cases, institutional arrangements in West Bengal -- which made tenancy heritable and imposed a prohibition on subleasing -- imply that early land reform benefits may not be sustained and gains from this policy remain well below potential. Data from a listing of 96,000 households in 200 villages, complemented by a detailed survey of 1,800 owner-cum tenants, point toward binding policy constraints and large contemporaneous inefficiency of share tenancy that is exacerbated by strong disincentives to investment. A conservative estimate puts the efficiency losses from such arrangements in any period at 25 percent.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6293.

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Date of creation: 01 Dec 2012
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Handle: RePEc:wbk:wbrwps:6293
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