Land and labor markets among paddy producers in the Nepalese Tarai

A central concern of this study is to confront both neoclassical and Marxist interpretations of two “semi-feudal” institutions—bonded labor and sharecropping—which are regarded as either inert and inefficient, by neoclassical economists or as repressive and exploitative, by Marxists. Both interpretations believe the demise of these institutions to be inevitable and welcome, and explain their prevalence and persistence by situating these institutions in a “prolonged transition” from feudalism to capitalism. Both interpretations are united in their assumptions that non-wage relations such as bonded labor and sharecropping (and the multitude of contractual arrangements they encompass) are static, homogenous, and an obstacle to technological change and economic development. This dissertation seriously questions whether these contracts are less “advanced” than fixed-rent or wage contracts, and challenges these assumptions both theoretically and empirically. In particular, I challenge the common perception that both bonded labor employment contracts in the labor market and sharecropping contracts in the land rental market are undifferentiated categories. Part I highlights the importance of taking labor heterogeneity into account, and develops a dissaggregated approach to do so. Important quality variation in different labor-employment types is found to lie in the differing incentives and wage characteristics each type of labor faces. Part II explores differences within sharecropping contracts, in which the labor and land markets overlap. We differentiate sharecropping contracts by the social distance that keeps tenants and landlords apart. This new variable proves to be statistically significant in explaining productivity differentials among share tenants in the Nepalese Tarai