The Effects of Land Markets on Resource Allocation and Agricultural Productivity

Chaoran Chen, Diego Restuccia and Raul Santaeulalia-Llopis ()

Review of Economic Dynamics, 2022, vol. 45, 41-54

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 about 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. (Copyright: Elsevier)

Keywords: Land, Markets, Rentals; Misallocation; Productivity; Inequality; Panel Data (search for similar items in EconPapers)
JEL-codes: E02 O10 O11 O13 O43 O55 Q15 Q18 Q24 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (66)

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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)
Working Paper: The Effects of Land Markets on Resource Allocation and Agricultural Productivity (2017)
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DOI: 10.1016/j.red.2021.04.006

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