On the Structure of Tenancy contracts: Theory and Evidence fron 19th Century Rural Sicily

Oriana Bandiera

STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers from Suntory and Toyota International Centres for Economics and Related Disciplines, LSE

Abstract: In a world with asymmetric information, contractual terms are an important incentive device. This paper studies the effect of crop characteristics on the choice between short-term and long-term tenancy contracts and on the choice between sharecropping and fixed rent contracts when the production process depends on two non-contractibles: effort devoted to current production and effort devoted to plant and soil maintenance. Long-term contracts are effective in providing incentive for non-contractible investment. Since, however, incentive provision is costly because of information rents, long-term contracts will be employed only when maintenance benefits are high enough. The predictions of the theory are tested on a unique data set containing 705 tenancy contracts signed between 1870 and 1880 in the province of Syracuse (Italy). The empirical evidence shows that indeed long term contracts were used if the crops grown had higher maintenance needs. Other comparative static results are derived and tested empirically.

Keywords: Microeconomic analyses of economic development; asymmetric and private information; land ownership and tenure; land reforms; land use; irrigation; formal and informal sectors; shadow economy; institutional arrangements (search for similar items in EconPapers)
Date: 1999-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://sticerd.lse.ac.uk/dps/de/dedps19.pdf (application/pdf)

Related works:
Working Paper: On the Structure of Tenancy Contracts: Theory and Evidence from 19th Century Rural Sicily (2001)
Working Paper: On the structure of tenancy contracts: theory and evidence from 19th century rural Sicily (2000)
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:cep:stidep:19

Access Statistics for this paper

More papers in STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers from Suntory and Toyota International Centres for Economics and Related Disciplines, LSE
Bibliographic data for series maintained by ().