Heterogeneity, Measurement Error, and Misallocation: Evidence from African Agriculture

Douglas Gollin () and Christopher Udry

No 13433, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Standard measures of productivity display enormous dispersion across farms in Africa. Crop yields and input intensities appear to vary greatly, seemingly in conflict with a model of efficient allocation across farms. In this paper, we present a theoretical framework for distinguishing between measurement error, unobserved heterogeneity, and potential misallocation. Using rich panel data from farms in Tanzania and Uganda, we estimate our model using a flexible specification in which we allow for several kinds of measurement error and heterogeneity. We find that measurement error and heterogeneity together account for a large fraction - as much as ninety percent -- of the dispersion in measured productivity. In contrast to some previous estimates, we suggest that the potential for efficiency gains through reallocation of land across farms and farmers may be relatively modest.

Keywords: Agricultural productivity; Misallocation; Productivity measurement; Firm productivity dispersion; Agricultural development; Agricultural production function estimation (search for similar items in EconPapers)
JEL-codes: O11 O12 O13 Q12 (search for similar items in EconPapers)
Date: 2019-01
New Economics Papers: this item is included in nep-agr, nep-bec and nep-eff
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Citations: View citations in EconPapers (18)

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Related works:
Journal Article: Heterogeneity, Measurement Error, and Misallocation: Evidence from African Agriculture (2021)
Working Paper: Heterogeneity, Measurement Error, and Misallocation: Evidence from African Agriculture (2019)
Working Paper: Heterogeneity, Measurement Error and Misallocation: Evidence from African Agriculture (2019)
Working Paper: Heterogeneity, Measurement Error, and Misallocation: Evidence from African Agriculture (2018)
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