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Assessing Misallocation in Agriculture: Plots versus Farms

Author

Listed:
  • Fernando M. Aragón

    (Simon Fraser University)

  • Diego Restuccia

    (University of Toronto)

  • Juan Pablo Rud

    (Royal Holloway, University of London)

Abstract

We assess the extent and cost of misallocation in agriculture in less-developed countries comparing the analysis at the plot and farm levels. Using detailed data from Uganda, we show that the plot-level analysis leads to extremely large estimates of reallocation gains, even after adjusting for measurement error and unobserved heterogeneity. These results reflect two empirical limitations of the plot as unit of analysis: excess measurement error and near constant returns to scale production estimates. We find limited evidence of substantial measurement error at the farm level.

Suggested Citation

  • Fernando M. Aragón & Diego Restuccia & Juan Pablo Rud, 2022. "Assessing Misallocation in Agriculture: Plots versus Farms," Working Papers 130, Red Nacional de Investigadores en Economía (RedNIE).
    • Handle: RePEc:aoz:wpaper:130
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    File URL: https://rednie.eco.unc.edu.ar/files/DT/130.pdf
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    References listed on IDEAS

    as
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    1. Chaoran Chen & Diego Restuccia & Raül Santaeulàlia-Llopis, 2023. "Land Misallocation and Productivity," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 441-465, April.

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    More about this item

    Keywords

    Plot; farm; misallocation; measurement error; agriculture; distortions;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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