Incentives and moral hazard: plot level productivity of factory-operated and outgrower-operated sugarcane production in Ethiopia
Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
Standard
Incentives and moral hazard : plot level productivity of factory-operated and outgrower-operated sugarcane production in Ethiopia. / Wendimu, Mengistu Assefa; Henningsen, Arne; Czekaj, Tomasz Gerard.
I: Agricultural Economics (United Kingdom), Bind 48, Nr. 5, 2017, s. 549–560.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
Harvard
APA
Vancouver
Author
Bibtex
}
RIS
TY - JOUR
T1 - Incentives and moral hazard
T2 - plot level productivity of factory-operated and outgrower-operated sugarcane production in Ethiopia
AU - Wendimu, Mengistu Assefa
AU - Henningsen, Arne
AU - Czekaj, Tomasz Gerard
PY - 2017
Y1 - 2017
N2 - We investigate the unique contractual arrangement between a large Ethiopian sugar factory and its adjacent outgrower associations. The only significant difference between the sugarcane production on the factory-operated sugarcane plantation and on the outgrower-operated plots is the remuneration system and thus, the incentives to the workers. We compare the productivity of these two production schemes using a cross-sectional plot-level data set. As sugarcane production depends on various exogenous factors that are measured as categorical variables (e.g., soil type, cane variety, etc.), we estimate the production function by a nonparametric kernel regression method that takes into account both continuous and categorical explanatory variables without assuming a functional form and without imposing restrictions on interactions between the explanatory variables. Our results show that outgrower-operated plots have-ceteris paribus-a statistically and economically significantly higher productivity than factory-operated plots, which can be explained by outgrowers having stronger incentives to put more effort into their work than the employees of the sugar factory.
AB - We investigate the unique contractual arrangement between a large Ethiopian sugar factory and its adjacent outgrower associations. The only significant difference between the sugarcane production on the factory-operated sugarcane plantation and on the outgrower-operated plots is the remuneration system and thus, the incentives to the workers. We compare the productivity of these two production schemes using a cross-sectional plot-level data set. As sugarcane production depends on various exogenous factors that are measured as categorical variables (e.g., soil type, cane variety, etc.), we estimate the production function by a nonparametric kernel regression method that takes into account both continuous and categorical explanatory variables without assuming a functional form and without imposing restrictions on interactions between the explanatory variables. Our results show that outgrower-operated plots have-ceteris paribus-a statistically and economically significantly higher productivity than factory-operated plots, which can be explained by outgrowers having stronger incentives to put more effort into their work than the employees of the sugar factory.
KW - Incentives
KW - Large-scale plantation
KW - Nonparametric regression
KW - Outgrower schemes
KW - Productivity
U2 - 10.1111/agec.12356
DO - 10.1111/agec.12356
M3 - Journal article
AN - SCOPUS:85021718800
VL - 48
SP - 549
EP - 560
JO - Agricultural Economics
JF - Agricultural Economics
SN - 0169-5150
IS - 5
ER -
ID: 180966083