Land Reform and Productivity: A Quantitative Analysis with Micro Data
AbstractWe assess the effects of a major land-policy change on farm size and agricultural productivity using a quantitative model and micro-level data. We study the 1988 land reform in the Philippines that imposed a ceiling on land holdings and severely restricted the transferability of the redistributed farm lands. We study this reform in the context of an industry model of agriculture with a non-degenerate distribution of farm sizes featuring an occupation decision and a technology choice of farm operators. In this model, a land reform reduces agricultural productivity not only by reallocating resources from large/high productivity farms to existing small/low productivity farms (misallocation effect), but also by distorting farmers' occupation and technology adoption decisions (selection effect). The model, calibrated to pre-reform farm-level data in the Philippines, implies that on impact the land reform reduces average farm size by 34 percent and agricultural productivity by 17 percent. The government assignment of land and the ban on its transfer are key for the magnitude of the results since a market allocation of the above-ceiling land produces only 1/3 of the size and productivity effects. These results emphasize the potential role of land market efficiency for misallocation and productivity in the agricultural sector.
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Bibliographic InfoPaper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-509.
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Date of creation: 04 Apr 2014
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agriculture; misallocation; within-farm productivity; land reform.;
Other versions of this item:
- Diego Restuccia & Tasso Adamopoulos, 2012. "Land Reform and Productivity: A Quantitative Analysis with Micro Data," 2012 Meeting Papers 1083, Society for Economic Dynamics.
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
This paper has been announced in the following NEP Reports:
- NEP-AGR-2014-04-11 (Agricultural Economics)
- NEP-ALL-2014-04-11 (All new papers)
- NEP-EFF-2014-04-11 (Efficiency & Productivity)
- NEP-GER-2014-04-11 (German Papers)
- NEP-SEA-2014-04-11 (South East Asia)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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