Who Expands Through Land Rental? Land Ownership Position and Productive Resources in Ethiopia

Abstract of the Paper

Land rental markets allow households to adjust the area they cultivate without changing ownership, but the direction of this adjustment under increasing land scarcity remains contested. We examine whether rental-mediated expansion in Ethiopia is associated with relatively larger local ownership holdings (ownership-scale gravity) or with complementary productive resources relative to land endowments (factor-ratio gravity). Using three rounds of the Ethiopia LSMS-ISA household panel (2011/12–2015/16), we construct upper-envelope ownership holdings to reduce the influence of instability in reported ownership and measure ownership rank within 𝑘𝑒𝑏𝑒𝑙𝑒𝑠. We distinguish tenant participation, rented-in area conditional on tenancy, and rented-in area relative to ownership. Higher local ownership rank is negatively associated with tenant participation and proportional land rental adjustment. Its association with conditional absolute rented-in area is weakly positive and becomes statistically insignificant when contemporaneous hired-labor use and credit access are included. Cultivation capacity (oxen ownership) is positively associated with all three outcomes, and its association diminishes as ownership rank increases. The negative ownership-rank gradient in proportional adjustment persists under alternative treatments of very small ownership holdings. These findings are consistent with factor-ratio gravity facilitating land rental expansion among relatively smaller owners, rather than a uniform pattern of expansion toward larger landowners.