Does Sharecropping Affect Long-term Investment? Evidence from West Bengal's Tenancy Reforms

Klaus Deininger, Songqing Jin and Vandana Yadav

American Journal of Agricultural Economics, 2013, vol. 95, issue 3, 772-790

Abstract: 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 2,000 owner-cum-tenants, point toward enormous excess demand for land rental and suggest that a continued inefficiency of sharecropping is exacerbated by strong disincentives to investment in soil fertility and irrigation. These reduce profits by at least 20%, making schemes to pay out landlord interests economically and financially viable. Copyright 2013, Oxford University Press.

Date: 2013
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