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 are striking differences in the size distribution of farms between rich and poor countries. We study the determinants of farm-size across countries and their impact on agricultural and aggregate productivity by developing a quantitative model of agriculture and non-agriculture that features a non-degenerate size distribution of farms. We find that differences in measured aggregate factors such as capital, land, and economy-wide productivity account for 1/4 of the observed differences in farm size and productivity. Farm-level policies that misallocate resources from large-productive to small less-productive farms, are prevalent in poor countries, and have the potential to account for the remaining differences. We assess the quantitative importance of misallocation in two ways. First, we construct a summary measure of farm-size distortions across countries by exploiting within-country variation in crop-specific price distortions with crop farm size. This measure and aggregate factors jointly account for more than 1/2 of the differences in size and productivity. Second, 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 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: 2013-03-08
New Economics Papers: this item is included in nep-agr and nep-eff
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Citations: View citations in EconPapers (2)

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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 (2011)
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-480

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