Property Rights and Labour Supply in Ethiopia

In rural areas agricultural plots are seldom delineated and can be encroached upon by neighbours. Under these circumstances labour supply can be inefficiently distorted to safeguard the plots from encroachment. Using panel data, we study the variation of household labour supply following a land registration programme which has demarcated agricultural landholdings with cornerstones and has issued a documentary evidence of the household land rights. Our results indicate that after the registration of their landholdings, households with a land certificate have reduced total time allocated to farming activities with no impact on agricultural yields. The reduction in labour supply is primarily driven by a decrease of time allocated to the pre-planting season. This is consistent with qualitative evidence that plots under cultivation have no visible sign of demarcation during pre-planting and disputes arise as neighbouring landholders pushed the boundaries of their plots while ploughing. Following land registration, the cornerstones reduce the need for guarding parcels as they make encroachment easier to detect.