TY - JOUR
T1 - Risk as impediment to privatization? The role of collective fields in extended agricultural households
AU - Delpierre, Matthieu
AU - Guirkinger, Catherine
AU - Platteau, Jean Philippe
N1 - Funding Information:
We are grateful to Frédéric Gaspart, Stefan Dercon, Rembert Deblander, Stéphanie Weynants, Michael Carter, Steve Boucher, Travis Lybbert, and seminar participants at Université catholique de Louvain, the Centre for the Study of African Economies conference in Oxford, the Department of Agricultural and Resource Economics, University of California–Davis, the Ferdi workshop on microfinance, Clermont Ferrand, and the Central European Program in Economic Theory workshop in Udine. Contact the.
Publisher Copyright:
© 2019 by The University of Chicago. All rights reserved.
PY - 2019/7/1
Y1 - 2019/7/1
N2 - As in the case of cooperatives, collective fields in extended agricultural households act as an insurance device but entail inefficiencies arising from the incentives to free ride on coworkers' efforts. Privatization provides good incentives but decreases the level of risk sharing. The classical analysis of this trade-off rules out another major risk-sharing mechanism, namely income transfers. This paper is a first attempt to merge the two insurance mechanisms: collective production, which is plagued by free riding, and income transfers, which are hampered by limited commitment. Privatization of land is shown to interact with incentives to abide by the insurance agreement, so that the trade-off between risk sharing and production may or may not be maintained with income transfers. We show that an increase in the value of the household members' exit option or a decrease in patience decreases the optimal rate of privatization, while larger households are more likely to privatize land.
AB - As in the case of cooperatives, collective fields in extended agricultural households act as an insurance device but entail inefficiencies arising from the incentives to free ride on coworkers' efforts. Privatization provides good incentives but decreases the level of risk sharing. The classical analysis of this trade-off rules out another major risk-sharing mechanism, namely income transfers. This paper is a first attempt to merge the two insurance mechanisms: collective production, which is plagued by free riding, and income transfers, which are hampered by limited commitment. Privatization of land is shown to interact with incentives to abide by the insurance agreement, so that the trade-off between risk sharing and production may or may not be maintained with income transfers. We show that an increase in the value of the household members' exit option or a decrease in patience decreases the optimal rate of privatization, while larger households are more likely to privatize land.
UR - http://www.scopus.com/inward/record.url?scp=85065901257&partnerID=8YFLogxK
U2 - 10.1086/700101
DO - 10.1086/700101
M3 - Article
AN - SCOPUS:85065901257
SN - 0013-0079
VL - 67
SP - 863
EP - 905
JO - Economic Development and Cultural Change
JF - Economic Development and Cultural Change
IS - 4
ER -