Land Use Restrictions, Misallocation in Agriculture, and Aggregate Productivity in Vietnam
MPRA Paper from University Library of Munich, Germany
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
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:90797
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