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Moral Hazard, Adverse Selection and Sharecropping in Ethiopia

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  • Tran, Anh N.

Abstract

Sharecropping is commonly practised in developing countries but the debate over the existence and magnitude of its disincentive effects on productivity remains controversial under competing contracting models. We address the two issues by analysing the effects of sharecropping contracts on tenant's performance in two environments: selection bias into share tenancy due to cultivator heterogeneity and adverse selection from landowner side on land characteristics. Using longitudinal data collected for owner-cum-sharecroppers in Amhara, Ethiopia, controlling for the selection biases, we found significantly negative effects of sharecropping contracts on production outcomes and input provision. However, sharecropping inefficiency can be mitigated by cultivator-specific characteristics as household size, gender and productive assets, making policy suggestions on reducing market imperfections more relevant.

Suggested Citation

  • Tran, Anh N., "undated". "Moral Hazard, Adverse Selection and Sharecropping in Ethiopia," 2016 Fifth International Conference, September 23-26, 2016, Addis Ababa, Ethiopia 246972, African Association of Agricultural Economists (AAAE).
  • Handle: RePEc:ags:aaae16:246972
    DOI: 10.22004/ag.econ.246972
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    Cited by:

    1. Muhammad Waqar Akram & Nida Akram & Wang Hongshu & Shahla Andleeb & Khalil ur Rehman & Umair Kashif & Ayesha Mehmood, 2019. "Impact of Land Use Rights on the Investment and Efficiency of Organic Farming," Sustainability, MDPI, vol. 11(24), pages 1-18, December.

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    Keywords

    Crop Production/Industries; Farm Management; Risk and Uncertainty;
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