Working Paper: NBER ID: w1566
Authors: Joseph E. Stiglitz
Abstract: This paper shows how recent developments in the Economics of Information can provide insights into economic relations in less developed countries, and how they can provide explanations for institutions which, in neoclassical theory, appear anomalous and/or inefficient. Sharecropping and other tenancy relationships in the rural sector and wage determination and urban unemployment are both investigated within this perspective.
Keywords: Economics of Information; Economic Development; Market Failures; Sharecropping; Urban Unemployment
JEL Codes: D82; O10; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| worker's risk aversion (J28) | choice of sharecropping contracts (Q15) |
| lack of complete markets and imperfect information (D52) | inefficiencies in economic outcomes (D61) |
| informational issues resolved (L96) | no inefficiencies in sharecropping (Q15) |
| nature of transactions costs (D23) | persistence of sharecropping arrangements (Q15) |
| productivity-wage relationship (J31) | wages above market-clearing levels (J31) |
| wages above market-clearing levels (J31) | unemployment (J64) |
| unemployment (J64) | discipline mechanism for workers (J53) |
| information economics (D89) | implications on institutional arrangements in LDCs (O17) |