Village Fairness Norms and Land Rental Markets

Abstract

This paper documents the role of village fairness norms in land markets. We establish a strong and robust relationship between experimentally elicited village-level fairness norms and land rental markets across 250 villages in Malawi. Stronger fairness norms correlate with a tighter range in rental rates. Fairness norms for tenants predominate and land-rental price ranges tend to be constrained through a price ceiling. Strong norms correlate with reduced market participation of landlords, and rented-in fields are of lower agronomic quality than owner-cultivated fields. Using nationally-representative secondary data we show that land rental rate adjustments to weather shocks are confined to villages where evidence suggests fairness norms are weak.