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Land tenure, investment incentives, and the choice of techniques : evidence from Nicaragua (English)

The choice of cultivation techniques is a key determinant of agricultural productivity and has important consequences for income growth and poverty reduction in developing countries. Household data from Nicaragua are used to show that the choice of cultivation technique depends on farmers' tenure status even when techniques are observable and contractible. In particular, tree crops are less likely to be grown on rented than on owner-cultivated plots. Further evidence indicates that the result follows from landlords’ inability or unwillingness to commit to long-term tenancy contracts rather than from agency costs due to risk aversion or limited liability.


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    Bandiera, Oriana

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    Journal Article

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    Latin America & Caribbean,

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    Land tenure, investment incentives, and the choice of techniques : evidence from Nicaragua

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    farmer;linear probability model;ownership status;asymptotic covariance matrix;moral hazard model;choice of technique;annual crop;average treatment effect;separation of ownership;measures of dispersion;number of adults;cultivation of tree;per capita gnp;large land holding;effect of maintenance;effects of ownership;tree crop;soil type;risk aversion;land reform;cultivation technique;long-term contract;farm size;average distance;contract duration;standard deviation;rental value;crop choice;soil quality;agricultural productivity;household wealth;contract length;standard error;credit constraint;household size;geographic area;farmer cooperative;descriptive statistic;individual farmer;nutrient recycling;small sample;conserve soil;soil erosion;agricultural activity;land law;landless peasant;long-term commitment;productivity differential;survey data;property right;risk averse;household structure;empirical evidence;farm level;expected return;sample mean;production technique;educational achievement;linear regression;large town;point estimate;future productivity;investment incentive;short term contract;short-term contract;research assistance;non-governmental organization;rural village;land policies;land policy;market town;weighting scheme;marginal effect;cross-sectional evidence;0 hypothesis;selection bias;citrus tree;land inequality;agricultural produce;linear model;measurement error;choice model;transportation cost;land rental;crop yield;tenure security;adult male;population data;missing value;opportunity cost;incentive cost;causal effect;cursory look;dependency ratio;asymmetric information;production risk;Rural Sector;farmers group;organizational form;average household;incentive structure;family labor;income growth;scale effect;rural area;democratic government;sampling strategy;development policy;upper bind;wealth measure;household characteristic;large farm;crop data;agricultural land;small farm;agricultural market;tree cover;national income;binding constraint;positive correlation;empirical analysis;collected information;farming activity;agency cost;land distribution;small family;farm rent;



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Bandiera, Oriana

Land tenure, investment incentives, and the choice of techniques : evidence from Nicaragua (English). Washington, D.C. : World Bank Group.