TY - JOUR
T1 - Land Misallocation and Productivity
AU - Chen, Chaoran
AU - Restuccia, Diego
AU - Santaeulàlia-Llopis, Raül
N1 - Funding Information:
We use a unique and detailed household-level dataset (National Statistical Office 2012), the Malawi ISA. The Malawi ISA is part of a new initiative funded by the Bill and Melinda Gates Foundation and is led by the Living Standards Measurement Study (LSMS) team in the Development Research Group of the World Bank. The survey is comprehensive in the collection of the entire agricultural production, such as physical amounts by crop, and the full set of inputs used in all agricultural activities, all collected by a new and enlarged agricultural module that distinguishes ISA from previous LSMS surveys. The data are nationally representative, with a sampling frame based on the census. There are four waves of the data for Malawi. We use three cross-section waves: 2010–2011, 2016–2017, and 2019–2020 (National Statistical Office 2012, 2017, 2020a), and the long panel 2010–2013–2016–2019 (National Statistical Office 2020b). We start by describing the 2010–2011 wave that we use to calculate our benchmark results, followed by a description of the unbalanced panel using the other waves. See online Appendix A for more details on the construction of our data.
Funding Information:
* Chen: Department of Economics, York University (email: chenecon@yorku.ca); Restuccia: Department of Economics, University of Toronto and NBER (email: diego.restuccia@utoronto.ca); Santaeulàlia-Llopis: University of Pennsylvania, Barcelona School of Economics, Universitat Autonoma de Barcelona, and CEPR (email: rauls@ movebarcelona.eu). Virgiliu Midrigan was coeditor for this article. For helpful comments, we thank Aslihan Arslan, Nadege Azebaze, Fancesco Caselli, Leandro De Magalhaes, Matthias Doepke, Pascaline Dupas, Chang-Tai Hsieh, Chad Jones, Joe Kaboski, Pete Klenow, Evelyn Korn, Per Krusell, Rody Manuelli, Andrew Newman, Chris Pissarides, Nancy Qian, José-Víctor Ríos-Rull, Richard Rogerson, Paul Romer, Nancy Stokey, Kjetil Storesletten, Kei-Mu Yi, two anonymous referees, and seminar participants at numerous institutions. All remaining errors are our own. Restuccia gratefully acknowledges the financial support from the Canadian Research Chairs program, the Social Sciences and Humanities Research Council of Canada, and the Bank of Canada Fellowship. Santaeulàlia-Llopis gratefully thanks the Spanish Ministry of Economy and Competitiveness, through the Proyectos I+D+i 2019 Retos Investigación PID2019-110684RB-I00 Grant, “Europa Excelencia” EUR2021-122011 and the Severo Ochoa Programme for Centres of Excellence in R&D (CEX2019-000915-S). The views expressed herein are not necessarily those of the Bank of Canada and are the authors alone.
Publisher Copyright:
© 2023, American Economic Journal: Macroeconomics. All Rights Reserved.
PY - 2023
Y1 - 2023
N2 - 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.
AB - 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.
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U2 - 10.1257/mac.20170229
DO - 10.1257/mac.20170229
M3 - Article
AN - SCOPUS:85163326726
SN - 1945-7707
VL - 15
SP - 441
EP - 465
JO - American Economic Journal: Macroeconomics
JF - American Economic Journal: Macroeconomics
IS - 2
ER -