Household Resources, Transaction Costs, and Adjustment through Land Tenancy

This paper examines the role of household endowments of imperfectly tradeable factors of production (e.g., male, female, child labor, and draft animals) on land leasing. An explicit attempt is made to account and test for the role of transaction costs on the incidence and extent of adjustment taking place through the land lease market. The econometric model is implemented using pooled data from six villages in the semiarid region of India. The results confirm the significant role of nontradeable family endowments and indicate the presence of frictions in the land tenancy market.