Impacts of tenancy arrangements on investment and efficiency: evidence from Pakistan

Authors


  • Data Appendix Available Online A data appendix to replicate main results is available in the online version of this article. Please note: Wiley-Blackwell is not responsible for the content or functionality of any supporting information supplied by the authors. Any queries (other than missing material) should be directed to the corresponding author for the article.

Tel: +49-431-880 4426. E-mail address: aabdula@food-econ.uni-kiel.de (A. Abdulai)

Abstract

In this article, we use farm-level data from the Punjab Province in Pakistan to analyze the impact of three tenancy contracts on investment in soil-improving and productivity-enhancing measures and farm productivity. A multivariate tobit model that accounts for potential substitutability and complementarity of investment options, as well as endogeneity of tenure arrangements was employed in the empirical analysis. Our empirical results indicate that land tenure arrangements influence farmers’ decisions to invest in soil-improving and productivity-enhancing measures. In particular, owner-cultivators with secured tenancy arrangements were found to be more likely to invest in soil-improving and productivity-enhancing measures, compared to those on leased contracts. We also find that output per hectare was highest on land cultivated by owners and lowest on land under sharecropping tenancy, lending support to the Marshallian inefficiency hypothesis.

Ancillary