Land Misallocation and Productivity
American Economic Journal: Macroeconomics
vol. 15,
no. 2, April 2023
(pp. 441-65)
Abstract
Using detailed household-level data from Malawi on physical quantities of agricultural outputs and inputs, we measure farm total factor productivity (TFP), controlling for land quality, rain, and transitory shocks. We find that operated land size and capital are essentially unrelated to farm TFP, implying substantial factor misallocation. The agricultural output gain from a reallocation of factors to their efficient use among existing farmers is a factor between 1.7- and 2.8-fold. We provide suggestive evidence connecting misallocation with the extent of land markets and illustrate how an efficient allocation via rental markets can substantially reduce agricultural income inequality and poverty.Citation
Chen, Chaoran, Diego Restuccia, and Raül Santaeulàlia-Llopis. 2023. "Land Misallocation and Productivity." American Economic Journal: Macroeconomics, 15 (2): 441-65. DOI: 10.1257/mac.20170229Additional Materials
JEL Classification
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D31 Personal Income, Wealth, and Their Distributions
- I32 Measurement and Analysis of Poverty
- O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
- O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration
- Q12 Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- Q15 Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
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