The Effects of Land Markets on Resource Allocation and Agricultural Productivity

Chaoran Chen, Diego Restuccia and Raül Santaeulàlia-Llopis

No 24034, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We assess the effects of land markets on misallocation and productivity both empirically and quantitatively. Exploiting variation from a land certification reform across time and space in Ethiopia, we find that certification facilitates rentals and improves agricultural productivity. We calibrate a quantitative macroeconomic model with heterogeneous household farms facing institutional costs to land markets using the micro panel data. The effect of a counterfactual reallocation from no rentals to efficient rentals increases zone-level agricultural productivity by 43 percent on average. While our estimated institutional costs are strongly associated with land certification across zones, there are nontrivial residual frictions to rental market activity, implying that land certification only partially captures the overall effects of rentals. A full certification reform accounts for just one-fourth of the overall productivity gains from land rentals. This result highlights the importance of comprehensive reforms alleviating frictions to land transactions beyond the granting of certificates.

JEL-codes: E02 O11 O13 O55 Q1 (search for similar items in EconPapers)
Date: 2017-11
New Economics Papers: this item is included in nep-agr, nep-eff and nep-mac
Note: DEV EFG PR
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Citations: View citations in EconPapers (39)

Published as Chaoran Chen & Diego Restuccia & Raül Santaeulàlia-Llopis, 2021. "The effects of land markets on resource allocation and agricultural productivity," Review of Economic Dynamics, .

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Related works:
Journal Article: The Effects of Land Markets on Resource Allocation and Agricultural Productivity (2022)
Working Paper: The Effects of Land Markets on Resource Allocation and Agricultural Productivity (2021)
Working Paper: The Effects of Land Markets on Resource Allocation and Agricultural Productivity (2020)
Working Paper: The Effects of Land Markets on Resource Allocation and Agricultural Productivity (2020)
Working Paper: The Effects of Land Markets on Resource Allocation and Agricultural Productivity (2019)
Working Paper: The Effects of Land Markets on Resource Allocation and Agricultural Productivity (2018)
Working Paper: The Effects of Land Markets on Resource Allocation and Agricultural Productivity (2018)
Working Paper: The Effects of Land Markets on Resource Allocation and Agricultural Productivity (2017)
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