Crop choice, trade costs, and agricultural productivity

Alberto Rivera-Padilla

Journal of Development Economics, 2020, vol. 146, issue C

Abstract: I argue that the agricultural productivity puzzle is in large part a staple productivity puzzle. Using detailed data from Mexican farms, I show that most farmers grow staple crops, despite the fact that labor productivity in cash crops is substantially higher. To explain this pattern I develop a quantitative general equilibrium framework with multiple regions and crop types, subsistence requirements of staple food, and interregional trade costs. In equilibrium, most farming production is in staple crops because subsistence constraints and high trade costs prevent most farmers from specializing in cash crops. Reducing trade costs in Mexico to the U.S. level would raise the ratio of employment in cash crops to staples by 15 percent and generate a 13 percent increase in agricultural labor productivity.

Keywords: Agriculture; Productivity; Crop choice; Trade costs (search for similar items in EconPapers)
JEL-codes: E01 E24 J43 J61 O11 O13 O18 O41 R11 R40 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:146:y:2020:i:c:s0304387820300924

DOI: 10.1016/j.jdeveco.2020.102517

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