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  5. Land Rental Markets: Experimental Evidence from Kenya

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Land Rental Markets: Experimental Evidence from Kenya

  • Michelle Acampora
  • Lorenzo Casaburi
  • Jack Willis
American Economic Review (Forthcoming)

Abstract

Do land market frictions cause misallocation in agriculture? In a field experiment in Western Kenya, we randomly subsidize owners to rent out land. Induced rentals mostly persist after the subsidy ends and increase output and value added, consistent with misallocation. Gains from trade arise from renters choosing higher-value crops, having higher productivity, and adopting more non-labor inputs, while, perhaps surprisingly, renters use similar quantities of labor as owners. Induced rentals are not those with the largest predicted gains, underlining the importance of the joint distribution of gains and frictions, with frictions arising from search, risk, and learning.

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