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Testing competing explanations for the inverse productivity puzzle

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  • Juliano Junqueira Assunção

    ()
    (Department of Economics PUC-Rio)

  • Luiz Henrique Braido

    (EPGE/FGV)

Abstract

We use plot-level data from ICRISAT to assess competing explanations for an old empirical regularity - the inverse relationship between land productivity and farm size. The presence of farmers who simultaneously crop multiple plots with di¤erent sizes is used to test (and reject) explanations based on household heterogeneity. The panel nature of the data is explored to test (and refuse) explanations based on plot fixed characteristics. We are then left with explanations based on time-varying plot features or measurement errors in the plot size. Theoretically, the input choices should reflect both plot-specific features and the true plot size. Empirically, the inverse relationship vanishes when we control for input use.

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Bibliographic Info

Paper provided by Department of Economics PUC-Rio (Brazil) in its series Textos para discussão with number 500.

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Length: 19p. JEL Code: C52, D82, O12, Q15.
Date of creation: Feb 2005
Date of revision:
Handle: RePEc:rio:texdis:500

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Keywords: Development; farm size; productivity.;

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  1. Bardhan, Pranab K, 1973. "Size, Productivity, and Returns to Scale: An Analysis of Farm-Level Data in Indian Agriculture," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 81(6), pages 1370-86, Nov.-Dec..
  2. Eswaran, Mukesh & Kotwal, Ashok, 1986. "Access to Capital and Agrarian Production Organisation," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 96(382), pages 482-98, June.
  3. Rosenzweig, Mark R & Binswanger, Hans P, 1993. "Wealth, Weather Risk and the Composition and Profitability of Agricultural Investments," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 103(416), pages 56-78, January.
  4. Assuncao, Juliano J. & Ghatak, Maitreesh, 2003. "Can unobserved heterogeneity in farmer ability explain the inverse relationship between farm size and productivity," Economics Letters, Elsevier, Elsevier, vol. 80(2), pages 189-194, August.
  5. Feder, Gershon, 1985. "The relation between farm size and farm productivity : The role of family labor, supervision and credit constraints," Journal of Development Economics, Elsevier, Elsevier, vol. 18(2-3), pages 297-313, August.
  6. Lilyan E. Fulginiti & Richard K. Perrin, 1992. "Prices and Productivity in Agriculture," Food and Agricultural Policy Research Institute (FAPRI) Publications, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University 93-gatt2, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  7. Bhalla, Surjit S., 1988. "Does land quality matter? : Theory and measurement," Journal of Development Economics, Elsevier, Elsevier, vol. 29(1), pages 45-62, July.
  8. Benjamin, Dwayne, 1995. "Can unobserved land quality explain the inverse productivity relationship?," Journal of Development Economics, Elsevier, Elsevier, vol. 46(1), pages 51-84, February.
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