The Size Distribution of Farms and International Productivity Differences

Tasso Adamopoulos and Diego Restuccia

Working Papers from University of Toronto, Department of Economics

Abstract: There is a 34-fold difference in average farm size (land per farm) between rich and poor countries and striking differences in their size distributions. Since labor productivity is much higher in large relative to small farms, we study the determinants of farm-size differences across countries and their impact on agricultural and aggregate productivity. We develop a quantitative model of agriculture and non-agriculture that features a non-degenerate size distribution of farms. We find that measured aggregate factors such as capital, land, and economy-wide productivity cannot account for more than 1/4 of the observed differences in farm size and productivity. We argue that, among the possible explanations, farm-level policies that misallocate resources from large to small farms have the most potential to account for the remaining differences. Such farm-size distortions are prevalent in poor countries. We quantify the effects of two specific policies in developing countries: (a) a land reform that imposes a ceiling on farm size and (b) a progressive land tax. We find that each individual policy generates a reduction of 3 to 7% in average size and productivity.

Keywords: aggregate productivity; agriculture; farm-size distortions; misallocation (search for similar items in EconPapers)
JEL-codes: E0 O11 O13 O4 (search for similar items in EconPapers)
Pages: Unknown pages
Date: 2011-10-27
New Economics Papers: this item is included in nep-agr, nep-eff and nep-opm
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Citations: View citations in EconPapers (29)

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Related works:
Journal Article: The Size Distribution of Farms and International Productivity Differences (2014)
Working Paper: The Size Distribution of Farms and International Productivity Differences (2013)
Working Paper: The Size Distribution of Farms and International Productivity Differences (2013)
Working Paper: The Size Distribution of Farms and International Productivity Differences (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:tor:tecipa:tecipa-441

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