Land markets and the distribution of land in northwestern Tanzania

•We examine how the land market affects land distribution in northwestern Tanzania.•A majority of households possess purchased land, indicating a robust land market.•Land purchasers and renters tend to have little or no initial land endowment.•Households with a larger initial endowment more readily dispose of land, likely through sales.•The market is used to make the distribution of land more equitable than inheritance.

Land market transactions can have potentially divergent effects on the distribution of land. While they may lead to a concentration of land in the hands of a wealthy minority, the market can also serve as an alternative avenue of land access for those with a limited inheritance. This paper explores the distributional implications of land sales and rental markets in northwestern Tanzania. Using household-level data collected in 2014, we find that households use the land market (particularly the sales market) to adjust their farm size to compensate for a small inheritance, while households with a larger initial endowment are more likely to dispose of land, including through the market. Our results suggest that the local land market, characterized by widespread participation, ultimately increases the equitability of land distribution.