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The Effects of Land Markets on Resource Allocation and Agricultural Productivity

Author

Listed:
  • Chaoran Chen
  • Diego Restuccia
  • Raül Santaeulàlia-Llopis

Abstract

We assess the role of land markets on factor misallocation in Ethiopia -where land is owned by the state- by exploiting policy-driven variation in land rentals across time and space arising from a recent land certification reform. Our main finding from detailed micro data is that land rentals significantly reduce misallocation and increase agricultural productivity. These effects are nonlinear across farms -impacting more those farms farther away from their efficient operational scale. The effect of land rentals on productivity is 70 percent larger when controlling for non-market rentals -those with a pre-harvest rental rate of zero. Land rentals significantly increase the adoption of new technologies, especially fertilizer use.

Suggested Citation

  • Chaoran Chen & Diego Restuccia & Raül Santaeulàlia-Llopis, 2017. "The Effects of Land Markets on Resource Allocation and Agricultural Productivity," Working Papers 1011, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:1011
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    References listed on IDEAS

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    Cited by:

    1. repec:aea:jecper:v:31:y:2017:i:3:p:151-74 is not listed on IDEAS
    2. 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.
    3. A.V. Chari & Elaine Liu & Shing-Yi Wang & Yongxiang Wang, 2017. "Property Rights, Land Misallocation and Agricultural Efficiency in China," Working Papers 2017-091, Human Capital and Economic Opportunity Working Group.

    More about this item

    Keywords

    productivity; agriculture; land markets; rentals; misallocation; micro data;

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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