Study Overview
The paper analyzes the effect of agricultural tenancy laws offering security of tenure to tenants and regulating the share of output that is paid as rent on farm productivity. Theoretically, the net impact of tenancy reform is shown to be a combination of two effects: a bargaining power effect and a security of tenure effect. Analysis of evidence on how contracts and productivity changed after a tenancy reform program was implemented in the Indian state of West Bengal in the late 1970s suggests that tenancy reform had a positive effect on agricultural productivity there.
Study Results
We concluded from our theoretical analysis that tenancy laws that lead to improved crop shares and higher security of tenure for tenants can have a positive effect on productivity. Evidence based on aggregate district-level data from the Indian state of West Bengal suggests that the tenancy reform program called Operation Barga explains around 28 percent of the subsequent growth of agricultural productivity there. However, given data limitations, we cannot separate the direct and indirect effects of Operation Barga. To get more precise estimates, microlevel data are required, which we leave to future research.