Insecure Land Rights and Reverse Share Tenancy in Madagascar

Abstract:     
Sharecropping between a poor landlord and a wealthier tenant  reverse share tenancy  is impossible in the canonical risk sharing model unless both parties are risk-averse. Based on field observations, this article develops an alternative hypothesis for reverse share tenancy in Madagascar deriving from insecure land rights. In this setting, the strength of the landlord's property right decreases in the risk borne by the tenant, so sharecropping may dominate fixed rent even with a risk-neutral tenant. Using landlords' subjective expectations about the likelihood of losing their land, empirical tests support the insecure property rights hypothesis while offering little support for risk sharing.

Keywords: Reverse Share Tenancy, Sharecropping, Property Rights, Subjective Expectations

JEL Classifications: D86, K11, O12, Q12, Q15

Working Paper Series