Title: Factors Affecting Participation Decisions in Land Rental Markets in Rural Ethiopia

Presenter:  Shifa Mhbua

Abstract:

In an agrarian economy like Ethiopia where a large number of households poorly endowed with non-labor assets, improving the functioning of rural land and other factor markets is fundamental to improve labor productivity and income earning opportunities of the poor. Understanding the pattern and determinant factors of land lease markets and the interaction it has with other factor markets has significant policy relevance. This paper examines the pattern and determinants of land lease markets in rural Ethiopia using a sample of 1241 farm households from four regions of the country. I use a dynamic probit model to estimate the land rental market participation decisions, while the extent of participation decisions is modelled using a dynamic tobit model.

The estimation results indicate the presence of significant state-dependence in the land rental markets, implying previous period participation had positive and significant effect on subsequent period participation decisions. Being a male-headed household, having more working age male household members and having at least one ox is associated with higher likelihood of land renting activities . Participation in off-farm self-employment and taking loans for production purposes is associated with more likelihood of participation in the demand side of the land lease market. The findings suggest that due to credit markets failure mainly resource poor but land rich households supply their land to the market and they are less likely to participate in off-farm self-employment activities.

As usual we start at 13.00 in the School of Economics Boardroom.