Subsistence farming and factor misallocation:Evidence from Ugandan agriculture

Bruno Morando

Economics Department Working Paper Series from Department of Economics, National University of Ireland - Maynooth

Abstract: This paper presents a model where misallocation in the agricultural factors of production is the result of frictions in the food market which result in a disproportionately large subsistence sector. The empirical analysis, based on microdata on Ugandan farms, corroborates the theoretical predictions of the qualitative model. Specifically: subsistence farmers operate inefficiently high shares of land and capital and the efficiency losses are more severe in areas where subsistence farming is more widespread, possi-bly due to higher transportation costs. Conversely, I find no relationship between the level of misallocation and credit access and/or land market activity. These findings suggest that market connectivity also plays a key role in determining the efficiency of agricultural input distribution and that land market liberalization is a necessary but not sufficient condition to tackle misallocation.

Keywords: Misallocation; Productivity; Agriculture; Uganda (search for similar items in EconPapers)
JEL-codes: O13 O40 Q14 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2021
New Economics Papers: this item is included in nep-agr, nep-dev and nep-eff
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Journal Article: Subsistence Farming and Factor Misallocation: Evidence from Ugandan Agriculture (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:may:mayecw:n308-21.pdf

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