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Inverse productivity : land quality, labor markets, and risk

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  • Russell L. Lamb

Abstract

I test three explanations of the inverse productivity relationship using the ICRISAT data. I reject land quality differences as a cause of the inverse relationship between profits per hectare and farm size. I find that both labor-market imperfections and risk aversion may play a role in explaining the inverse productivity relationship. Smaller farmers use more labor per-hectare than larger farmers, although the relationship is ameliorated somewhat by considering land-quality effects. Risk aversion may cause smaller farmers to over-apply labor to production, but it also fails to fully explain the inverse relationship.

Suggested Citation

  • Russell L. Lamb, 1997. "Inverse productivity : land quality, labor markets, and risk," Research Working Paper 97-10, Federal Reserve Bank of Kansas City.
  • Handle: RePEc:fip:fedkrw:97-10
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    Cited by:

    1. Lipton, Michael, 2010. "From Policy Aims and Small-farm Characteristics to Farm Science Needs," World Development, Elsevier, vol. 38(10), pages 1399-1412, October.

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