Empowerment and Efficiency: The Economics of Agrarian Reform

Posted: 23 Jan 1999

See all articles by Abhijit V. Banerjee

Abhijit V. Banerjee

Massachusetts Institute of Technology (MIT) - Department of Economics

Paul J. Gertler

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Maitreesh Ghatak

London School of Economics (LSE) - Department of Economics

Date Written: October 1998

Abstract

We analyze the effect of agricultural tenancy laws that offer security of tenure to tenants and regulate the share of output they should pay the landlord as rent on farm productivity. Theoretically, the net impact of tenancy reform is shown to be a combination of two effects. A bargaining power effect tends to improve the crop-share of tenants and hence improves their incentives in general. A security of tenure effect tends to encourage investment by the tenant on one hand, but on the other hand eliminates the possibility of using eviction threats as an incentive device by the landlord. Analysis of evidence on how contracts and productivity changed after a tenancy reform program was implemented in the Indian state of West Bengal in the late seventies suggests that tenancy reform played an important role in increasing agricultural productivity.

JEL Classification: D23, D82, O12, O15

Suggested Citation

Banerjee, Abhijit V. and Gertler, Paul J. and Ghatak, Maitreesh, Empowerment and Efficiency: The Economics of Agrarian Reform (October 1998). Available at SSRN: https://ssrn.com/abstract=141182

Abhijit V. Banerjee (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Paul J. Gertler

University of California, Berkeley - Haas School of Business ( email )

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National Bureau of Economic Research (NBER)

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Maitreesh Ghatak

London School of Economics (LSE) - Department of Economics ( email )

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United Kingdom
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44 20 7955 6951 (Fax)

HOME PAGE: http://sticerd.lse.ac.uk/dps/adds/ghatak/cv-lse-sept02.pdf

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