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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 misallocating resources from large/high productivity farms to incumbent small/low productivity farms, but also by distorting farmers' occupation and technology adoption decisions. 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% and agricultural productivity by 17%. 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-525, University of Toronto, Department of Economics.
  • Handle: RePEc:tor:tecipa:tecipa-525
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    More about this item

    Keywords

    agriculture; misallocation; within-farm productivity; land reform.;
    All these keywords.

    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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