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Land market distortions and aggregate agricultural productivity: evidence from Guatemala

Braulio Britos (), Manuel Hernandez, Luis Robles and Danilo Trupkin ()
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Braulio Britos: University of Minnesota

No 2020-55, Documentos de trabajo del Instituto Interdisciplinario de Economía Política (IIEP-BAIRES) from Universidad de Buenos Aires, Facultad de Ciencias Económicas, Instituto Interdisciplinario de Economía Política (IIEP-BAIRES)

Abstract: Farm size and land allocation are important factors in explaining lagging agricultural productivity in developing countries. This paper examines the effect of land market imperfections on land allocation across farmers and aggregate agricultural productivity. We develop a theoretical framework to model the optimal size distribution of farms and assess to what extent market imperfections can explain non-optimal landallocation and output inefficiency. We measure these distortions for the case of Guatemala using agricultural census microdata. We find thatdue to land market imperfections aggregate output is 19% below its efficient level for both maize and beans and 31% below for coffee, whichare three major crops produced nationwide. The regions with higher distortions show a higher dispersion in land prices and less active rentalmarkets. We also find that the degree of land market distortions across locations co-variate with road accessibility and ethnicity and, in a lowerextent, with education.

Keywords: Land Market Distortions; Output Inefficiency; Agricultural Productivity; Guatemala (search for similar items in EconPapers)
JEL-codes: O13 O40 Q15 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2020-09
New Economics Papers: this item is included in nep-agr, nep-dev and nep-eff
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