may not contribute to greater productivity but<sup>instead lead to re-concentrationof land. The relativelythin</sup> evidence available, e.g. from Chile (Echenique<sup>andRolando1990)and Honduras(CarterandSalgado</sup> 2001) seems to confirm this although examples<sup>from Paraguay (Carter andGaleano1995)and Guatemala</sup> (Barham _et aL_ 1995) suggest that well-functioning<sup>land marketsmay,in somesituations,also transfer</sup> land to small producers. However, most of<sup>theavailableempiricalevidenceoriginatesfromLatin</sup> America, a continent that is characterized by<sup>high inequality in access to land, a long history of distortions</sup> in agricultural markets, a tradition of weak property<sup>rights,and often significant entry barriersin the rural</sup> non-farm sector (Reardon _et al._ 2001). Many<sup>of theseconditions differnarkedlyfrom EastAsia andin</sup> some cases also Africa where, with<sup>someexceptions,land ownershipismoreegalitarian,population</sup> density is often high, and with lower wages<sup>and higher rates of economic growth, opportunitiesto join the</sup> off-farm sector are more plentiful.' There is general agreement that expansion<sup>of the off-farm economyimpliesnot only greater demands for</sup> land markets but can also be affected by the scope<sup>forsuch markets to function (deJanvry</sup><sup>_et al._2001),</sup> empirical analysis of the factors underlying<sup>theperformanceof land salesand rentalmarkets as wellas</sup> their impact would be of considerable interest.<sup>Twokeyelementswould bethe extenttowhich markets</sup> contribute to equity, i.e. provide land access<sup>tothepoor,theircontributiontogreaterproductive</sup> efficiency, and the existence of potential trade-offs<sup>between these twogoals.Concerning productivityof</sup> land use, data limitations have in the past<sup>often preventedstudies from making clear inferences.</sup> In view of the fact that with development of<sup>the off-farm economy, the scopefor productivity-enhancing</sup> land transfers, and thus the losses associated<sup>withadministrativeprohibitionor malfunctioningof such</sup> markets, are likely to increase significantly, the<sup>lackof empiricalevidenceonthelevelof activityand</sup> productivity impact of land markets is of great<sup>policyrelevance.In this paper,we addressboth of these</sup> issues by providing evidence on the functioning of<sup>land rental and salesmarketsseparately and by using a</sup> measure of households' productive efficiency<sup>for thecase of Vietnam,oneof the fewtransition countries</sup> where, even though land ownership remains<sup>withthe state, both short termrentaland permanenttransfers</sup> of use rights are allowed. Conceptually, and in<sup>linewiththe literature,weassume that land marketsare</sup> driven by three factors, households' agricultural<sup>ability which isunobserved;labor marketimperfections</sup> in the form of supervision constraints; and<sup>capitalmarket imperfections. (Deininger</sup><sup>_etal._2002).</sup> Empirically, a large and nationally representative<sup>panel data setisused toillustrate theevolutionof</sup> markets over time and derive a proper measure<sup>of producers' ability that can be usedto make inferences</sup> on the productivity impact of land markets.

> ' Many of these characteristics also apply<sup>totheAfricancountri4smentionedearlier,althoughpopulationdensityisof courseverylowin</sup> Mozarmbique, in contrast to Ethiopia.

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