ECON 6280 Lecture Notes - Lecture 12: Sharecropping, Production Function, Gcr Class 11B
Document Summary
Price, weather, and other uncertainty (lack of property rights, insurance, access to credit), which leads to risk-averse behaviors. Another problem in developing countries: small farms are more productive than large farms, because of land quality and farmer characteristics (people work 40% more on their own land than a rented land) Agency problems large farms cultivated by hired labor (fewer incentive to work hard) Fixed-rent contract landlord charges a fixed sum of money for the use of land, but farmers don"t like the risk. Landlords can use threat of eviction to kick out bad farmers and bring in good farmers -> does. Not work: lower the bargaining power of tenants and lower incentive to provide effort, and the risk-averse tenants will not undertake long-term productivity measures. Redistributing land is difficult, because it"s opposed by landowners who often control important political resources. Production function = farmgate price x quantity (wage x labor)