On the Structure of Tenancy Contracts: Theory and Evidence Fron 19th Century Rural Sicily

48 Pages Posted: 30 Apr 2008

See all articles by Oriana Bandiera

Oriana Bandiera

London School of Economics & Political Science (LSE) - Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Date Written: January 2000

Abstract

This paper analyses the empirical determinants of contract length, a key and yet neglected dimension of contractual structure. I use data on tenancy agreements signed between 1870 and 1880 in the district of Siracusa, Italy to estimate the choice over length and compensation schemes jointly. The findings indicate that the choice of contract length is driven by the need to provide incentives for non-observable investment, taking into account transaction costs and imperfections in the credit markets that make incentive provision costly. The results also illustrate that since both length and the compensation scheme are used to provide incentives within the same contract, joint analysis is important for a correct interpretation of the evidence.

Suggested Citation

Bandiera, Oriana, On the Structure of Tenancy Contracts: Theory and Evidence Fron 19th Century Rural Sicily (January 2000). LSE STICERD Research Paper No. DEDPS19, Available at SSRN: https://ssrn.com/abstract=1126988

Oriana Bandiera (Contact Author)

London School of Economics & Political Science (LSE) - Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD) ( email )

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