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Land Reform and Productivity: A Quantitative Analysis with Micro Data

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  • Tasso Adamopoulos
  • Diego Restuccia

Abstract

We 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.

Suggested Citation

  • Tasso Adamopoulos & Diego Restuccia, 2014. "Land Reform and Productivity: A Quantitative Analysis with Micro Data," Working Papers tecipa-509, University of Toronto, Department of Economics.
  • Handle: RePEc:tor:tecipa:tecipa-509
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. 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.
    2. Chaoran Chen, 2017. "Untitled Land, Occupational Choice, and Agricultural Productivity," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(4), pages 91-121, October.
    3. Raul Santaeulalia-Llopis & Diego Restuccia, 2014. "Land Misallocation and Productivity," 2014 Meeting Papers 1314, Society for Economic Dynamics.
    4. Gottlieb, Charles & Grobovsek, Jan, 2015. "Communal land and agricultural productivity," LSE Research Online Documents on Economics 86311, London School of Economics and Political Science, LSE Library.
    5. World Bank Group, 2015. "Moldova Public Expenditure Review," World Bank Other Operational Studies 28331, The World Bank.
    6. Wenbiao Cai, 2015. "Technology, Policy Distortions and the Rise of Large Farms," Departmental Working Papers 2015-03, The University of Winnipeg, Department of Economics.
    7. Klaus Deininger & Songqing Jin & Yanyan Liu & Sudhir K Singh, 2016. "Can Labor Market Imperfections Explain Changes in the Inverse Farm Size–Productivity Relationship? Longitudinal Evidence from Rural India," Working Papers id:10987, eSocialSciences.
    8. Tasso Adamopoulos & Loren Brandt & Jessica Leight & Diego Restuccia, 2017. "Misallocation, Selection and Productivity: A Quantitative Analysis with Panel Data from China," Working Papers tecipa-593, University of Toronto, Department of Economics.
    9. IFPRI International Food Policy Research Institute, 2016. "Can Labour Market Imperfections Explain Changes in the Inverse Farm Size-Productivity Relationship?: Longitudinal Evidence from Rural India," Working Papers id:11007, eSocialSciences.
    10. Diego Restuccia, 2018. "Misallocation and Aggregate Productivity across Time and Space," Working Papers tecipa-596, University of Toronto, Department of Economics.
    11. Chaoran Chen, 2017. "Technology Adoption, Capital Deepening, and International Productivity Differences," Working Papers tecipa-584, University of Toronto, Department of Economics.

    More about this item

    Keywords

    agriculture; misallocation; within-farm productivity; land reform.;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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