In addition to the positive impact on efficiency, we also note that land rental markets have a positive impact on equity by transferring land to those with more limited endowments. This is illustrated by the fact that the coefficient on land endowment is negative and highly significant; in line with the negative, though insignificant, coefficient on initial per capita expenditure. At the same time, the positive coefficient on possession of draft animals, together with the marginally significant on agricultural assets (at 10%) point towards some imperfections in markets for animals and capital equipment. However, noting that the coefficient on total (non-land) assets is insignificant allows us to conclude that rental markets have a positive overall impact on equity. This is reinforced by the fact that the regression leads us to reject the hypothesis that female-headed households were disadvantaged in access to land rental opportunities and that those who experienced a shock were not more likely to engage in land rental activity.

We also note that rental markets tend to transfer land to producers in the most productive age; the tendency to rent in land increases, though only weakly, up to a maximum of 48 years. Households with access to remittances are slightly less likely to rent in land, although the coefficient is significant only at 10%. Village level variables illustrate that higher security of tenure in the form of land use certificates is highly significant in increasing the demand for renting in. Having all the land in the village under longterm use rights is estimated to increase the propensity to rent in land by almost 12 percentage points, thus highlighting the need for a minimum level of tenure security as one of the institutional pre-conditions for rental markets to emerge. However, rental activity is higher rather than lower in villages that depend more heavily on agriculture, as proxied by the mean share of income from agriculture.

As descriptive statistics pointed towards marked differences across regions, we specify a second model where the level of ability is interacted with regional dummies. Results, reported in column 2 of table 3, confirm that there are significant differences in the extent to which rental markets contribute to greater productive efficiency; point estimates for the respective parameter are 0.15 and 0.14 in regions I and 3, respectively, while being much smaller (0.03) in region 2 and insignificant in region 4. Other coefficients are not affected. We note that the general conclusions are consistent with evidence from the tobit model which is available upon request, and will return to discuss the regionally differentiated result for below, jointly with the evidence for sales markets.

On the supply side to the rental market, we find that the sign on ability is insignificant and the sign on land endowments negative and significant at the 10% level, implying that neither low agricultural ability nor large land endowments provide a strong motivation for households to rent out land. In fact, the positive and significant signs on total assets, past off farm experience, and the share of households with credit access in the village all suggest that opportunities for off-farm employment are the driving force behind supply of land to the rental market, a notion that is supported by the negative and significant sign 14