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Land Misallocation and Productivity

Listed author(s):
  • Diego Restuccia
  • Raul Santaeulalia-Llopis

Using detailed household-level data from Malawi on physical quantities of outputs and inputs in agricultural production, we measure total factor productivity (TFP) for farms controlling for land quality, rain, and other transitory shocks. We find that operated land size and capital are essentially unrelated to farm TFP implying substantial factor misallocation. The aggregate agricultural output gain from a reallocation of factors to their efficient use among existing farmers is a factor of 3.6-fold. We directly link factor misallocation to severely restricted land markets as the vast majority of land is allocated by village chiefs and not marketed. In particular, the output gain from reallocation are 2.6 times larger for farms with no marketed land than for farms that only operate marketed land.

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File URL: https://www.economics.utoronto.ca/public/workingPapers/tecipa-575.pdf
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Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-575.

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Length: Unknown pages
Date of creation: 25 Jan 2017
Handle: RePEc:tor:tecipa:tecipa-575
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  13. Akos Valentinyi & Berthold Herrendorf, 2008. "Measuring Factor Income Shares at the Sectoral Level," IEHAS Discussion Papers 0803, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
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  15. Tasso Adamopoulos & Loren Brandt & Jessica Leight & Diego Restuccia, 2017. "Misallocation, Selection and Productivity: A Quantitative Analysis with Panel Data from China," Working Papers tecipa-574, University of Toronto, Department of Economics.
  16. Markus Goldstein & Christopher Udry, 2005. "The Profits of Power: Land Rights and Agricultural Investment in Ghana," Working Papers 929, Economic Growth Center, Yale University.
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  22. Diego Restuccia & Dennis Tao Yang & Xiaodong Zhu, 2007. "Agriculture and Aggregate Productivity: A Quantitative Cross-Country Analysis," Working Papers e07-3, Virginia Polytechnic Institute and State University, Department of Economics.
  23. David Lagakos & Michael E. Waugh, 2013. "Selection, Agriculture, and Cross-Country Productivity Differences," American Economic Review, American Economic Association, vol. 103(2), pages 948-980, April.
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  25. Yu Zheng & Raul Santaeulalia, 2016. "The Price of Growth: Consumption Insurance in China 1989-2009," 2016 Meeting Papers 826, Society for Economic Dynamics.
  26. Beegle, Kathleen & Carletto, Calogero & Himelein, Kristen, 2011. "Reliability of recall in agricultural data," Policy Research Working Paper Series 5671, The World Bank.
  27. Carletto, Calogero & Savastano, Sara & Zezza, Alberto, 2011. "Fact or artefact : the impact of measurement errors on the farm size - productivity relationship," Policy Research Working Paper Series 5908, The World Bank.
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