tractors are open to dispute, it is generally recognized that access to tubewell water raises productivity. Small farmers may thus be at a disadvantage, which can be overcome if they can rent in expensive lumpy inputs or purchase water on the open market.

A more recent data set from (Mahmood et al 1988) also reveals some important differences across classes of farmers. Farmers' education is an important influence on yield levels, controlling for other factors. Education is also related to use of commercial inputs (fertilizer and tractors). This suggests that more educated farmers have the managerial skills necessary to use these inputs, or alternatively that they have the skills to gain access to these inputs. Since commercial inputs have been subject to policy distortions in the past, even farmers who would have used the inputs equally productively may have differential ability to circumvent the constraints to obtaining these inputs.

Risk aversion could make small farmers less commercially oriented than large farmers but Rosenzweig and Binswanger found that this effect only operated at very high levels of risk in semi-arid India.

The conclusion to be drawn is similar to that of Rosenzweig and Binswanger (1993): the lower supervision and labor costs arising from the use of family labor on small farms more than outweigh the scale, capital cost, and risk diffusion advantages of bigger and wealthier farmers. However, some farms can be simply too small and resource-poor to be efficient even if all institutional constraints were removed. Evidence generally supports the view that the efficiency of the smallest, and presumably most marginal, farmers is low.

Tenancy: Tenancy can also have an important productivity impact. The length of the time horizon for owners and tenants is bound to differ, giving rise to differing attitudes towards long term investments (especially natural resource management investnents), and crops with long gestation lags. These effects are likely to be particularly strong for Pakistan's sizable number of tenants-at-will, who can be evicted at any time, except during the cropping season. Insecurity of tenure also causes a bias towards the opening of new land (an unpriced resource), even if such land is marginal land.

In addition, different types of tenancy may have different incentive effects. Since sharecroppers only receive half of the additional output arising from extra effort, they may have weaker incentives than fixed-rent tenants. In this regard, landlord supervision and cost-sharing can overcome the disincentive effect of sharecropping. More generally, landlord supervision can overcome the problem of differing time-horizons between owner and tenant. However, supervision is a costly activity, and may not be undertaken at all by absentee landlords.

In practice, tenant farming has been in steep decline in Pakistan since the 1960s. Between 1960 and 1980 the number of tenants declined from 2 million to 1.1 million. Mabmood (1994) finds that this decline continued through the 1980s, with an increasing tendency to selfcultivate amongst larger farners. In addition to the decline of tenancy, the compositior of tenants by contract type is a major issue. Over 90 percent of rental area is share-cropped out rather then being at a fixed rental. A fixed-rental land market has failed to emerge in traditional 16