Testing Between Competing Theories of Reverse Share Tenancy by Marc F. Bellemare :: NEUDC 2007 Papers :: Northeast Universities Development Consortium Conference :: Center for International Development at Harvard University (CID)

Reverse share tenancy, i.e., sharecropping between a poor landlord and a rich tenant, is common throughout the developing world. Yet it can only fit the canonical principal-agent model of sharecropping under specific circumstances. This paper develops and tests between three theoretical explanations for reverse share tenancy based respectively on (i) risk-aversion on the part of both the landlord and the tenant; (ii) asset risk, or weak property rights; and (iii) limited liability. Survey data from Madagascar offer strong support for the asset risk hypothesis, pointing to the need to broaden the canonical sharecropping model to account for reverse share tenancy. JEL Classification Codes: D86, O12, Q12, Q15. ∗Assistant Professor of Public Policy and Economics, Terry Sanford Institute of Public Policy, Duke University, 201 Science Drive, Box 90239, Durham, NC, 27708-0239, (919) 613-7405, [email protected].