IDEAS home Printed from https://ideas.repec.org/p/ake/iiepdt/202055.html
   My bibliography  Save this paper

Land market distortions and aggregate agricultural productivity: evidence from Guatemala

Author

Listed:
  • Braulio Britos

    (University of Minnesota)

  • Manuel Alejandro Hernandez

    (International Food Policy Research Institute)

  • Luis Miguel Robles

    (Universidad del Pacífico)

  • Danilo Trupkin

    (Instituto Interdisciplinario de Economía Política de Buenos Aires - UBA - CONICET)

Abstract

Farm size and land allocation are important factors in explaining lagging agricultural productivity in developing countries. This paper examines the effect of land market imperfections on land allocation across farmers and aggregate agricultural productivity. We develop a theoretical framework to model the optimal size distribution of farms and assess to what extent market imperfections can explain non-optimal landallocation and output inefficiency. We measure these distortions for the case of Guatemala using agricultural census microdata. We find thatdue to land market imperfections aggregate output is 19% below its efficient level for both maize and beans and 31% below for coffee, whichare three major crops produced nationwide. The regions with higher distortions show a higher dispersion in land prices and less active rentalmarkets. We also find that the degree of land market distortions across locations co-variate with road accessibility and ethnicity and, in a lowerextent, with education.

Suggested Citation

  • Braulio Britos & Manuel Alejandro Hernandez & Luis Miguel Robles & Danilo Trupkin, 2020. "Land market distortions and aggregate agricultural productivity: evidence from Guatemala," Documentos de trabajo del Instituto Interdisciplinario de Economía Política (IIEP-BAIRES) 2020-55, Universidad de Buenos Aires, Facultad de Ciencias Económicas, Instituto Interdisciplinario de Economía Política (IIEP-BAIRES).
  • Handle: RePEc:ake:iiepdt:202055
    as

    Download full text from publisher

    File URL: http://iiep-baires.econ.uba.ar/uploads/publicaciones/524/archivos/1.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Tasso Adamopoulos & Diego Restuccia, 2014. "The Size Distribution of Farms and International Productivity Differences," American Economic Review, American Economic Association, vol. 104(6), pages 1667-1697, June.
    2. Pedro Bento & Diego Restuccia, 2017. "Misallocation, Establishment Size, and Productivity," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(3), pages 267-303, July.
    3. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741, Elsevier.
    4. Chaoran Chen & Diego Restuccia & Raul Santaeulalia-Llopis, 2022. "The Effects of Land Markets on Resource Allocation and Agricultural Productivity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 41-54, July.
    5. Raul Santaeulalia-Llopis & Diego Restuccia, 2014. "Land Misallocation and Productivity," 2014 Meeting Papers 1314, Society for Economic Dynamics.
    6. Diego Restuccia & Richard Rogerson, 2008. "Policy Distortions and Aggregate Productivity with Heterogeneous Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 707-720, October.
    7. Douglas Gollin & Christopher Udry, 2021. "Heterogeneity, Measurement Error, and Misallocation: Evidence from African Agriculture," Journal of Political Economy, University of Chicago Press, vol. 129(1), pages 1-80.
    8. Barrett, Christopher B., 1996. "On price risk and the inverse farm size-productivity relationship," Journal of Development Economics, Elsevier, vol. 51(2), pages 193-215, December.
    9. Aragón, Fernando M. & Restuccia, Diego & Rud, Juan Pablo, 2022. "Are small farms really more productive than large farms?," Food Policy, Elsevier, vol. 106(C).
    10. Alain de Janvry & Kyle Emerick & Marco Gonzalez-Navarro & Elisabeth Sadoulet, 2015. "Delinking Land Rights from Land Use: Certification and Migration in Mexico," American Economic Review, American Economic Association, vol. 105(10), pages 3125-3149, October.
    11. Tasso Adamopoulos & Diego Restuccia, 2022. "Geography and Agricultural Productivity: Cross-Country Evidence from Micro Plot-Level Data [Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution]," Review of Economic Studies, Oxford University Press, vol. 89(4), pages 1629-1653.
    12. Markus Goldstein & Christopher Udry, 2008. "The Profits of Power: Land Rights and Agricultural Investment in Ghana," Journal of Political Economy, University of Chicago Press, vol. 116(6), pages 981-1022, December.
    13. Chaoran Chen, 2017. "Untitled Land, Occupational Choice, and Agricultural Productivity," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(4), pages 91-121, October.
    14. Restuccia, Diego & Yang, Dennis Tao & Zhu, Xiaodong, 2008. "Agriculture and aggregate productivity: A quantitative cross-country analysis," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 234-250, March.
    15. Diego Restuccia & Richard Rogerson, 2017. "The Causes and Costs of Misallocation," Journal of Economic Perspectives, American Economic Association, vol. 31(3), pages 151-174, Summer.
    16. Heath Henderson & Alan G. Isaac, 2017. "Modern Value Chains and the Organization of Agrarian Production," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(2), pages 379-400.
    17. Andrew D. Foster & Mark R. Rosenzweig, 2022. "Are There Too Many Farms in the World? Labor Market Transaction Costs, Machine Capacities, and Optimal Farm Size," Journal of Political Economy, University of Chicago Press, vol. 130(3), pages 636-680.
    18. Eric Bartelsman & John Haltiwanger & Stefano Scarpetta, 2013. "Cross-Country Differences in Productivity: The Role of Allocation and Selection," American Economic Review, American Economic Association, vol. 103(1), pages 305-334, February.
    19. 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.
    20. Chang-Tai Hsieh & Peter J. Klenow, 2009. "Misallocation and Manufacturing TFP in China and India," The Quarterly Journal of Economics, Oxford University Press, vol. 124(4), pages 1403-1448.
    21. Joel M. David & Hugo A. Hopenhayn & Venky Venkateswaran, 2016. "Information, Misallocation, and Aggregate Productivity," The Quarterly Journal of Economics, Oxford University Press, vol. 131(2), pages 943-1005.
    22. Douglas Gollin & David Lagakos & Michael E. Waugh, 2014. "The Agricultural Productivity Gap," The Quarterly Journal of Economics, Oxford University Press, vol. 129(2), pages 939-993.
    23. Besley, Timothy & Pande, Rohini & Leight, Jessica & Rao, Vijayendra, 2011. "The regulation of land markets: evidence from tenancy reform in India," LSE Research Online Documents on Economics 58204, London School of Economics and Political Science, LSE Library.
    24. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 3567, London School of Economics and Political Science, LSE Library.
    25. Lowder, Sarah K. & Sánchez, Marco V. & Bertini, Raffaele, 2019. "Farms, family farms, farmland distribution and farm labour: What do we know today?," ESA Working Papers 301283, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
    26. Lowder, Sarah K. & Skoet, Jakob & Raney, Terri, 2016. "The Number, Size, and Distribution of Farms, Smallholder Farms, and Family Farms Worldwide," World Development, Elsevier, vol. 87(C), pages 16-29.
    27. Hopenhayn, Hugo & Rogerson, Richard, 1993. "Job Turnover and Policy Evaluation: A General Equilibrium Analysis," Journal of Political Economy, University of Chicago Press, vol. 101(5), pages 915-938, October.
    28. David Lagakos & Michael E. Waugh, 2013. "Selection, Agriculture, and Cross-Country Productivity Differences," American Economic Review, American Economic Association, vol. 103(2), pages 948-980, April.
    29. repec:oup:qjecon:v:129:y:2014:i:2:p:939-993. is not listed on IDEAS
    30. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-1150, September.
    31. T.S. Jayne & Jordan Chamberlin & Lulama Traub & Nicholas Sitko & Milu Muyanga & Felix K. Yeboah & Ward Anseeuw & Antony Chapoto & Ayala Wineman & Chewe Nkonde & Richard Kachule, 2016. "Africa's changing farm size distribution patterns: the rise of medium-scale farms," Agricultural Economics, International Association of Agricultural Economists, vol. 47(S1), pages 197-214, November.
    32. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 5266, London School of Economics and Political Science, LSE Library.
    33. Akos Valentinyi & Berthold Herrendorf, 2008. "Measuring Factor Income Shares at the Sector Level," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 820-835, October.
    34. Jordan Chamberlin & Jacob Ricker-Gilbert, 2016. "Participation in Rural Land Rental Markets in Sub-Saharan Africa: Who Benefits and by How Much? Evidence from Malawi and Zambia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(5), pages 1507-1528.
    35. Place, Frank, 2009. "Land Tenure and Agricultural Productivity in Africa: A Comparative Analysis of the Economics Literature and Recent Policy Strategies and Reforms," World Development, Elsevier, vol. 37(8), pages 1326-1336, August.
    36. Jochen Dürr, 2016. "The political economy of agriculture for development today: the “small versus large” scale debate revisited," Agricultural Economics, International Association of Agricultural Economists, vol. 47(6), pages 671-681, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shichao Yuan & Jian Wang, 2022. "Involution Effect: Does China’s Rural Land Transfer Market Still Have Efficiency?," Land, MDPI, vol. 11(5), pages 1-18, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hernandez, M. & Britos, B. & Robles, M. & Trupkin, D., 2018. "Land market distortions: Theory and evidence from Guatemala," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277031, International Association of Agricultural Economists.
    2. Gottlieb, Charles & Grobovšek, Jan, 2019. "Communal land and agricultural productivity," Journal of Development Economics, Elsevier, vol. 138(C), pages 135-152.
    3. Diego Restuccia & Richard Rogerson, 2017. "The Causes and Costs of Misallocation," Journal of Economic Perspectives, American Economic Association, vol. 31(3), pages 151-174, Summer.
    4. Chen, Chaoran, 2020. "Technology adoption, capital deepening, and international productivity differences," Journal of Development Economics, Elsevier, vol. 143(C).
    5. Le, Kien, 2020. "Land use restrictions, misallocation in agriculture, and aggregate productivity in Vietnam," Journal of Development Economics, Elsevier, vol. 145(C).
    6. Marijn A. Bolhuis & Swapnika R. Rachapalli & Diego Restuccia, 2021. "Misallocation in Indian Agriculture," NBER Working Papers 29363, National Bureau of Economic Research, Inc.
    7. Diego Restuccia, 2019. "Misallocation and aggregate productivity across time and space," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(1), pages 5-32, February.
    8. Douglas Gollin & Christopher Udry, 2021. "Heterogeneity, Measurement Error, and Misallocation: Evidence from African Agriculture," Journal of Political Economy, University of Chicago Press, vol. 129(1), pages 1-80.
    9. Tasso Adamopoulos & Diego Restuccia, 2020. "Land Reform and Productivity: A Quantitative Analysis with Micro Data," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(3), pages 1-39, July.
    10. Aragón, Fernando M. & Restuccia, Diego & Rud, Juan Pablo, 2022. "Are small farms really more productive than large farms?," Food Policy, Elsevier, vol. 106(C).
    11. Raul Santaeulalia-Llopis & Diego Restuccia, 2014. "Land Misallocation and Productivity," 2014 Meeting Papers 1314, Society for Economic Dynamics.
    12. David Lagakos & Mushfiq Mobarak & Michael Waugh, 2018. "The Welfare Effects of Encouraging Rural-Urban Migration," Working Papers 2018-002, Human Capital and Economic Opportunity Working Group.
    13. Chaoran Chen & Diego Restuccia & Raul Santaeulalia-Llopis, 2022. "The Effects of Land Markets on Resource Allocation and Agricultural Productivity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 41-54, July.
    14. Tasso Adamopoulos & Loren Brandt & Jessica Leight & Diego Restuccia, 2022. "Misallocation, Selection, and Productivity: A Quantitative Analysis With Panel Data From China," Econometrica, Econometric Society, vol. 90(3), pages 1261-1282, May.
    15. Blanco, Cesar & Raurich, Xavier, 2022. "Agricultural composition and labor productivity," Journal of Development Economics, Elsevier, vol. 158(C).
    16. A.V. Chari & Elaine M. Liu & Shing-Yi Wang & Yongxiang Wang, 2017. "Property Rights, Land Misallocation and Agricultural Efficiency in China," NBER Working Papers 24099, National Bureau of Economic Research, Inc.
    17. Bento, Pedro & Restuccia, Diego, 2021. "On average establishment size across sectors and countries," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 220-242.
    18. Apoorv Gupta & Jacopo Ponticelli & Andrea Tesei, 2020. "Information, Technology Adoption and Productivity: The Role of Mobile Phones in Agriculture," NBER Working Papers 27192, National Bureau of Economic Research, Inc.
    19. Shenoy, Ajay, 2017. "Market failures and misallocation," Journal of Development Economics, Elsevier, vol. 128(C), pages 65-80.
    20. Zhao, Xiaoxue, 2020. "Land and labor allocation under communal tenure: Theory and evidence from China," Journal of Development Economics, Elsevier, vol. 147(C).

    More about this item

    Keywords

    Land Market Distortions; Output Inefficiency; Agricultural Productivity; Guatemala;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ake:iiepdt:202055. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/ieeubar.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Carolina Conde (email available below). General contact details of provider: https://edirc.repec.org/data/ieeubar.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.