Summary In recent years that has been a revival of interest in the economic analysis of social institutions and market behaviour in developing economies. Whilst customary arrangements surrounding economic exchange were once treated as irrational or out‐moded, they are now understood in terms of cost‐minimization and risk‐reduction by rational agents responding to imperfect market environments. This article attempts to scrutinize some of the claims of the new institutional economics from a perspective largely neglected by institutional economists and their critics, that is the perspective of gender and agrarian social relations. The paper points to the shortcomings in institutional explanations of rules and social conventions that exclude or discriminate against women in agricultural labour markets, and the failure to adequately conceptualize the role of power and ideology in the formation and maintenance of social (sometimes socially sub‐optimal) institutions.