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Prof. Lorenzo Casaburi

University of Zurich, Switzerland

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Authors: Lorenzo Casaburi, Michelle Acampora and Jack Willis

Abstract: In much of Sub-Saharan Africa, land markets operate far from perfectly, with widespread consequences for rural economic life. In one of the first field experiments on land markets, we induce land market participation in Kenya by subsidizing agricultural rentals. We study who selects in, what renters do differently to owners, and the effects on agricultural and owner outcomes. The induced rentals increase equity in land allocation, by reallocating plots to younger, more entrepreneurial farmers, who own fewer plots; and the rentals persist beyond the subsidy period. Renters increase output and value added on the rented plot -- by more than the effect of an unconditional cash transfer to owners --  and they do so by increasing commercial crop cultivation and non-labor inputs, not by supplying more labor to the plot. While owners cultivate less land under the subsidy, their production on other plots does not change and their non-agricultural labor decreases.