“Absentee Landlords and Land Tenancy”

Annemie Maertens

University of Sussex

Abstract: Internal migration and structural transformation are strongly interrelated. We use Indian district level data spanning 2001-2013 to examine a little-known aspect of this relationship: how migration affects agricultural land rental contracts. Building on anecdotal evidence and theory, we hypothesize that as landlords migrate away, their choice of rental contract for tenant-cultivators changes from sharecropping to fixed rent. Using a shift-share instrument that exploits unique information on bilateral migration flows between districts, we show that migration increased fixed rent tenancy and contract formalization. Given the continued importance of agricultural land rental markets, these findings have significant implications for rural efficiency and equity in developing countries.