The Choice of Agrarian Contracts in Early Renaissance Tuscany: Risk Sharing, Moral Hazard, or Capital Market Imperfections?

Abstract

Historians have advanced various hypotheses regarding the spread of sharecropping in late medieval Italy and early modern France. The risk-sharing hypothesis argues that, in times of labor shortages following the Black Death, landlords used share contracts to attract risk-averse tenants. The moral-hazard/multitasking hypothesis asserts that sharecropping was an ideal contract for monitoring a tenant's effort and protecting valuable assets on the farm. The imperfect capital market hypothesis maintains that imperfect capital markets favored the expansion of share contracts. Unlike previous work, this article simultaneously tests all three hypotheses thanks to a unique sample of landlords and tenants in 1427 Tuscany. We conclude that there is support for both the moral-hazard and the imperfect capital market hypotheses, but not for the risk-sharing hypothesis.