Land Misallocation and Productivity

Chaoran Chen, Diego Restuccia, Raül Santaeulàlia-Llopis

Research output: Contribution to journalArticlepeer-review


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.

Original languageEnglish (US)
Pages (from-to)441-465
Number of pages25
JournalAmerican Economic Journal: Macroeconomics
Issue number2
StatePublished - 2023

ASJC Scopus subject areas

  • General Economics, Econometrics and Finance


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