CLTS Working Papers, Centre for Land Tenure Studies, Norwegian University of Life Sciences
Jeetendra P. Aryal
Livestock and Land Share Contracts in a Hindu Society
() and Stein T. Holden
Abstract: This paper examines factors related to the existence of a
livestock rental market in western Nepal and assesses whether this is
associated with caste differentiation and land rental market participation.
This study brings new empirical evidence of livestock rental market against
the established view that such market does not exist due to moral hazard.
Theoretical models for asset- rich (high-caste) households, rich in land
and livestock, and asset-poor (low-caste) households are presented
providing logical explanations for the existence of a livestock rental
market and synergies between livestock and land rental market
participation. A combination of double hurdle models and bivariate ordered
probit models were applied to test the implications of the models. The
empirical evidence was found to be consistent with the theoretical models.
Land- and livestock-rich (high-caste) households were more likely to rent
out land and/or livestock. Land- and livestock-poor and credit constrained
(low-caste) households were more likely to rent in livestock and land.
Participation in the two markets was positively correlated indicating
synergies that may be due to production and transaction cost reducing
benefits. The male labor endowment, partly determined by migration, was a
major determinant of livestock rental behavior.
Keywords: livestock rental market; land rental market; share contracts; asset poverty; caste; Nepal; (follow links to similar papers)
JEL-Codes: O12; O13; Q12; Q15; (follow links to similar papers)
38 pages, June 7, 2011
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