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The Effects of Land Markets on Resource Allocation and Agricultural Productivity

Diego Restuccia (), Chaoran Chen and Raul Santaeulalia-Llopis

Working Papers from University of Toronto, Department of Economics

Abstract: We assess the effects of land markets on misallocation and productivity by exploiting effective variation in land rentals across time and space arising from a large-scale land certifcation reform in Ethiopia, where land remains owned by the state. Our main fnding from detailed micro panel data is that land rentals substantially reduce misallocation and increase agricultural productivity. Our evidence builds from an empirical difference-in-difference strategy and a calibrated quantitative macroeconomic framework with heterogeneous household-farms that replicates|without targeting|the empirical effects, an outcome that externally validates our model. The empirical effects are nonlinear|impacting more farms farther away from effcient operational scale, consistent with our theory. Further, counterfactual model experiments suggest that the land reform reduces income inequality, is relatively scalable and explains a sizeable proportion of the full extent of misallocation. Additional insights on the role of (in)formality in land markets and its effects on technology adoption are provided

Keywords: Land markets; rentals; effects; misallocation; productivity; inequality; micro data; quantitative macro; informal markets; technology; fertilizers (search for similar items in EconPapers)
JEL-codes: E02 O10 O11 O13 O43 O55 Q15 Q18 Q24 (search for similar items in EconPapers)
Pages: Unknown pages
Date: 2020-03-18
New Economics Papers: this item is included in nep-agr, nep-eff, nep-iue and nep-mac
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Related works:
Working Paper: The Effects of Land Markets on Resource Allocation and Agricultural Productivity (2020) Downloads
Working Paper: The Effects of Land Markets on Resource Allocation and Agricultural Productivity (2019) Downloads
Working Paper: The Effects of Land Markets on Resource Allocation and Agricultural Productivity (2018) Downloads
Working Paper: The Effects of Land Markets on Resource Allocation and Agricultural Productivity (2017) Downloads
Working Paper: The Effects of Land Markets on Resource Allocation and Agricultural Productivity (2017) Downloads
Working Paper: The Effects of Land Markets on Resource Allocation and Agricultural Productivity (2017) Downloads
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