We use data from Ethiopia to empirically assess determinants of participation in land rental markets, compare these to those of administrative land reallocation, and make inferences on the likely impact of households’ expectations regarding future redistribution. Results indicate that rental markets outperform administrative reallocation in terms of efficiency and poverty. Households who have part-time jobs in the off-farm sector are significantly more likely to expect land to be taken away from them through administrative means. Eliminating the scope for administrative land reallocation may thus a pre-condition for more vigorous development of the off-farm sector.