Reconsidering Conventional Explanations of the Inverse Productivity-Size Relationship
AbstractThe inverse productivity-size relationship is one of the oldest puzzles in development economics. Two conventional explanations for the inverse relationship have emerged in the literature: (i) factor market imperfections that cause cross-sectional variation in household-specific shadow prices and thereby induce variation in input application rates; and (ii) the omission of soil quality measurements that are inversely correlated with farm or plot size but positively associated with yields. This study uniquely employs precise soil quality measurements at the plot level with multiple plots per household so as to allow testing of both conventional explanations simultaneously. Our empirical results show that, in these data, only a small portion of the inverse productivity-size relationship is explained by market imperfections and none of it seems attributable to the omission of soil quality measurements.
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Bibliographic InfoPaper provided by Duke University, Department of Economics in its series Working Papers with number 10-22.
Date of creation: 2010
Date of revision:
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Inverse Relationship; Productivity; Market Failures; Soil Characteristics; Sub-Saharan Africa; Madagascar;
Other versions of this item:
- Barrett, Christopher B. & Bellemare, Marc F. & Hou, Janet Y., 2010. "Reconsidering Conventional Explanations of the Inverse Productivity-Size Relationship," World Development, Elsevier, vol. 38(1), pages 88-97, January.
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
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