Efficiency and Equity of Rural Land Markets and the Impact on Income: Evidence in Kenya and Uganda from 2003 to 2015

This study examines the evolution and impact of land sales and rental markets on agricultural efficiency in rural Kenya and Uganda using panel data spanning over 10 years.We first analyse the efficiency gains induced by land sales and rental markets by estimating the impact of participation in markets on unobserved farmer ability and land endowment.We do find evidence in both countries, that land markets induce efficiency by transferring land to households with higher farming ability.In both countries, the land market enhances equity by transferring land from land-abundant to land-constrained households.Although renting-in land increases crop income in Kenya, we find no evidence that renting in land enables households to escape from poverty.In contrast, increase in land owned helped decrease poverty incidence in Uganda.These findings points to potential weaknesses in the functioning of land markets in Kenya and Uganda which impedes their ability to contribute to poverty alleviation.