short-term workers. 6 Tenancy can be used to allocate these imperfectly marketed labor inputs. Thus, in
environments with imperfect factor markets, land tenancy plays a significant economic role by facilitating
the efficient allocation of farm inputs.
The differences in the difficulty of supervision across farm tasks are clearly manifested in how
these tasks are allocated in a farm’s organization. The easily supervised tasks (harvesting, threshing,
weeding etc.) are typically delegated to hired short-term workers or teams of workers who are paid a
fixed or piece-rate wage. The more spatially and temporally spread out tasks are, on the other hand, often
performed by the owner’s family or tenants.7 The goal of this paper is to understand the mechanism by
which some or all of these tasks may be delegated to a tenant.
The motivation for this work comes from several interesting empirical observations made in quite
different historical and geographical contexts. The earliest articulation of tenancy as a partnership
between a landlord and a tenant comes from a series of papers by Reid [1973, 1975, 1976, 1979] on the
emergence of sharecropping as a common form of tenancy in the Post-Bellum American South. He
argued that freed slaves possessed large amounts of unskilled labor but lacked the managerial expertise
that was required to single-handedly carry out cotton cultivation. The former slaves who lacked
management or decision making abilities appear to have formed partnerships with white landlords who,
due to their significantly greater experience and resources, possessed these qualities in abundance. Bell
and Srinivasan [1985] find similar evidence in the entirely different setting of the contemporary Indian
states of Punjab, Bihar and Andhra Pradesh. Their survey questionnaire asked explicit questions about the
role landlords and tenants play in making key decisions and performing managerial tasks. The survey
6 See Bell and Zusman [1976], Bliss and Stern [1982], Pant [1983] and Eswaran and Kotwal [1985a]. Some other tasks,
such as harvesting and threshing, are quite amenable to direct supervision. These tasks have outcomes that are
immediately and directly observed during a short time frame so that direct monitoring is feasible.
7 In some areas, especially in India, these tasks are sometimes given to permanent hired workers. It has been argued,
however, that these permanent workers face very similar incentives to that of family members and are considered a de
facto part of the household [Eswaran and Kotwal 1985b].