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Contract Duration and the Division of Labor in Agricultural Land Leases

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  • Yoder, Jonathan K.
  • Hossain, Ishrat
  • Epplin, Francis M.
  • Doye, Damona G.

Abstract

Short-term contracts provide weak incentives for durable input investment if post-contract asset transfer is difficult. Our model shows that when both agents provide inputs, optimal contract length balances weak incentives of one agent against the other. This perspective broadens the existing contract duration literature, which emphasizes the tradeoff between risk sharing and contract costs. We develop hypotheses and test them based on private grazing contracts from the Southern Great Plains. We find broad support for the implications of our model. For example, landowners provide durable land-specific inputs more often under annual versus multiyear contracts.

Suggested Citation

  • Yoder, Jonathan K. & Hossain, Ishrat & Epplin, Francis M. & Doye, Damona G., 2005. "Contract Duration and the Division of Labor in Agricultural Land Leases," Working Papers 12962, Washington State University, School of Economic Sciences.
    • Handle: RePEc:ags:wsuewp:12962
    DOI: 10.22004/ag.econ.12962
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    2. Beyene, Abebe D. & Bezabih, Mintewab & Gebreegziabher, Zenebe, 2012. "Contract Duration under Incomplete Land Ownership Rights: Empirical Evidence from Rural Ethiopia," RFF Working Paper Series dp-12-09-efd, Resources for the Future.
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    6. Shi, X. & Zhou, Y. & Heerink, N. & Ma, X., 2018. "The effect of land tenure governance on grain efficiency: Evidence from three provinces in eastern China," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277477, International Association of Agricultural Economists.
    7. Choi, Jiseon & Jodlowski, Margaret C., 2022. "Tenure Status and Land Investment in South Korea," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322476, Agricultural and Applied Economics Association.
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    More about this item

    Keywords

    Labor and Human Capital; Land Economics/Use;

    JEL classification:

    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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