Files
Abstract
Making use of a unique tenant-landlord matched data from the Tigray region of Ethiopia, we are
able to show how strategic response of tenants - to varying economic and tenure security status of
the landlords - is important in explaining productivity differentials of sharecroppers. The results
show that sharecroppers’ yield are significantly lower on plots leased from landlords who are
non-kin; female; with lower income generating opportunity; and tenure insecure households, than
on plots leased from landlords with contrasting characteristics. While, on aggregate, the result
shows no significant efficiency loss on kin-operated sharecropped plots, a more decomposed
analyses indicate strong evidences of Marshallian inefficiency on kin-operated plots leased from
landlords with weaker bargaining power and higher tenure insecurity. This study, thus, shows
how failure to control for such heterogeneity of landowners' characteristics can explain the lack
of clarity in the existing empirical literature on the extent of moral hazard problems in
sharecropping contracts.