Abstract
Property right establishment of labour chance should be founded before making employment transaction enforceable. This property right establishment have to be investigated, when the process of institutional change of employment transaction is considered. The cost of property right establishment is defined as cost of exclusion against trespass and cost of measurement and delineation of labour.
Employment practice has been changed in Java's village economy from ‘bawon’ to ‘kedokan’, ‘borongan’ and ‘tebasan’. This institutional change should be analysed from the viewpoint of property right establishment. First, ‘bawon’ was considered as common property which allows open access for harvesting chance. But ‘bawon’ is also considered to be adopted as common property in order to save prohibitive exclusion cost rather than altruistic share of poverty. But rent is dissipated in ‘bawon’. So secondly, ‘bawon’ has been changed to new institutions in order to establish property right of labour chance and restore rent. Institution form is decided on the point in which marginal cost of property right establishment cost equals marginal restored rent. Thirdly, exclusion of labourer stands for keeping certain labourer simultaneously. So new institution is also used for recruiting. Forthly, interlinked and mutual employment institutions are adopted to save cost of exclusion, measurement and delineation. Fifthly, altruistic rent sharing behavior ought to be understood as economically rational conduct rather than social obligation, when cost of institutional change is considered.
