Evidence on the Incentive Properties of Share Contracts

Luis Braido ()

Journal of Law and Economics, 2008, vol. 51, issue 2, 327-349

Abstract: Ever since Adam Smith, share contracts have been condemned for their lack of incentives. Sharecropping tenants face incentives to undersupply productive inputs since they receive only a fraction of the marginal revenue. The empirical literature reports that lands under sharecropping are indeed less productive and employ inputs less intensively than those operated by owners. This paper shows that (1) sharecropping and fixed-rent tenancy are both associated with low-quality lands, (2) plots under sharecropping and fixed rent present (on average) the same unconditional productivity, (3) controlling for observed land quality and input use, their average productivities are also identical to those of owner-operated plots, and (4) the input choices satisfy the same profit maximization conditions for all land contracts. These results challenge the conventional wisdom connecting sharecropping to incentive distortions. They support an alternative view that farmers optimally employ more input resources into good-quality lands, which are typically managed by owners. (c) 2008 byThe University of Chicago. All rights reserved.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://dx.doi.org/10.1086/589663 link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:jlawec:v:51:y:2008:i:2:p:327-349

Access Statistics for this article

More articles in Journal of Law and Economics from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().