The New Palgrave Dictionary of Economics Online

Sharecropping is a form of land leasing contract between a tenant and a landlord who share the production. It has a variety of forms and is sometimes linked with credit, lending, or insurance. The apparent inefficiency of sharecropping due to the fact that the tenant receives only a share of the marginal productivity of his labour has attracted economists’ attention since Adam Smith. Within the principal–agent paradigm, sharecropping is now thought of as trading off incentives and risk sharing or as reducing transaction costs for a landlord willing to lend out a piece of land.