Assessing the functioning of land rental markets in Ethiopia

Klaus Deininger, Daniel Ayalew Ali and Tekie Alemu

No 4442, Policy Research Working Paper Series from The World Bank

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.

Keywords: Rural Land Policies for Poverty Reduction; Land Use and Policies; Labor Policies; Municipal Housing and Land; Economic Theory&Research (search for similar items in EconPapers)
Date: 2007-12-01
New Economics Papers: this item is included in nep-afr, nep-agr, nep-dev and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Journal Article: Assessing the Functioning of Land Rental Markets in Ethiopia (2008)
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