Land Inequality, Farm Size, and Productivity: Insights From Peruvian Agriculture

Hernán Borrero

Agricultural Economics, 2025, vol. 56, issue 5, 839-849

Abstract: This paper investigates the analogous land inequality and farm size‐productivity relationships, focusing on agricultural total factor productivity (TFP) rather than partial productivity measures. Using a panel of 268 Peruvian districts over a 5‐year period (2015–2019), I implement a system generalized method of moments (GMM) estimation framework, which adapts to the presumed data‐generating process and structure of the panel while tackling the critical issue of simultaneity bias. The regression output supports both relationships, with a 0.6% increase in agricultural TFP for every one‐percentage point reduction of the land Gini coefficient or a one‐hectare decrease in average farm size. Moreover, an assessment of the potential impact of land quality heterogeneity and measurement error reveals that neither issue appears to bias the results. Finally, the role of rural reform is discussed, emphasizing the need to weigh the moral considerations of equal opportunity to land of the land‐poor against the legitimate property rights of the land‐rich on a case‐by‐case basis.

Date: 2025
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