markets.<sup>15</sup> Subject to the usual caveats with this type of data,<sup>16</sup> rental markets seem to equalize factor ratios whereas sales markets often appear to work in the opposite direction.

We note significant differences between lessors and lessees in the share of income (15% vs. 52%), the ownership of agricultural assets (10% vs. 83% with any cattle), asset- and consumer-good endowments, and the level of poverty (4.%% vs. 16.5%). This is consistent with the notion that those supplying land to the rental market are moving out of agriculture. Interestingly, lessee households own more land, are larger and headed by younger individuals (by an average of 10 years) highlighting that rental markets contribute to a growth in average farm size and can be critical for transferring land across generations and creating opportunities for rural youth.<sup>17</sup> Levels of education do not differ significantly by status of rental market participation. Similarly, rental appears to have little impact on land consolidation; in fact the number of plots tenants own is slightly larger than that of landlord- or autarkic households. Community characteristics also suggest that land rental markets are active under conditions (e.g. limited access to credit and labor shortages) that would normally be considered quite unfavorable. The value of output per hectare (2,150 US$/ha) for tenants is significantly larger than that for the entire sample (1800 US$/ha) and almost an order of magnitude above what is achieved by landlords ($ 275/ha). Part of the difference is due to the fact that tenants have more irrigated land (0.86 against 0.27 for autarkic and 0.07 for landlord households). Unfortunately, the survey did not collect information on the prices paid for leasing land, thus preventing us from making inferences on the associated welfare effects. With tenants‟ profits per hectare more than double those by autarkic households or landlords, descriptive data suggest that rental transfers land to more productive production, something to be explored econometrically below.

At a descriptive level, comparing land rental to sales markets points to a number of differences. First, both output and profits per hectare by land purchasers are significantly lower than for those in autarky, suggesting that land sales may be motivated by factors other than a desire to increase productivity of land use. Also, while those renting in land receive the lion‟s share (52%) of their income from agriculture, those purchasing land obtain some 80% of their income from non-agricultural sources. Operation and impact of land sales markets may thus be structurally quite different from those for rental.

# **4.4 Econometric evidence on land market operation**

Results from the ordered probit regression for land rental and sales market participation are reported in col. 1 and 2 as well as 3 and 4 of table 4, with and without ability respectively. To interpret coefficients,

> 15 T-tests suggest that most of the differences in means for those on the supply- and the demand side and autarkic households are significant at conventional levels but are omitted here to reduce clutter. They are available from the authors upon request.

> 16 If sellers or lessors have left rural communities, descriptive statistics may be biased. Even if they remained in rural areas, land owners who no longer engage in agricultural production may not e captured in the LSMS survey where questions on participation in agricultural land markets appear in the agricultural module that is administered only to those who currently cultivate agricultural land (Deininger and Jin 2008).

> 17 A number of countries have initiated promising efforts to foster structural change and transfer of land to young producers by allowing those who transfer their entire land on a long-term basis (12 years or longer) to access pensions early, akin to early retirement schemes in other sectors.

15