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Land Use Restrictions, Misallocation in Agriculture, and Aggregate Productivity in Vietnam

Kien Le

MPRA Paper from University Library of Munich, Germany

Abstract: We evaluate the effects of restricted land use rights on aggregate productivity using micro-level data within a quantitative model. In particular, we exploit the Rice Land Designation Policy in Vietnam, which forces farmers to produce rice on almost 45% of plots of land. The policy provides a natural setting for investigating the aggregate effects of land use misallocation. We quantify the impacts of this system by formulating a two-sector model featuring production and occupation choices. We also use digitized versions of Vietnam’s Local Land Use Atlas and Global Agro-Ecological Zones database to construct a micro-spatial dataset that shapes important features of the model and allows us to compare the restricted against a counterfactual efficient allocation. The main findings suggest that eliminating all land use restrictions leads to 10.6% gain in agricultural total factor productivity and 4.36% increase in real GDP per capita. While misallocation in agriculture has been studied extensively, our research highlights a novel source of misallocation that is prevalent in other countries such as China, Myanmar, Uzbekistan, among others.

Keywords: Agriculture; misallocation; land use restrictions; aggregate productivity; Vietnam (search for similar items in EconPapers)
JEL-codes: O11 O13 O4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-eff, nep-sea and nep-tra
Date: 2018-12-20
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https://mpra.ub.uni-muenchen.de/90797/1/MPRA_paper_90797.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/91570/4/MPRA_paper_91570.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:90797

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