Land Reform and Productivity: A Quantitative Analysis with Micro Data
We assess the effects of a major land policy change on farm size and agricultural productivity using a quantitative model and micro-level data. We study the 1988 land reform in the Philippines that imposed a ceiling on land holdings, redistributed above-ceiling lands to landless and smallholder households, and severely restricted the transferability of the redistributed farm lands. We study this reform in the context of an industry model of agriculture with a non-degenerate distribution of farm sizes featuring an occupation decision and a technology choice of farm operators. In this model, the land reform can reduce agricultural productivity not only by misallocating resources across farmers but also by distorting farmers' occupation and technology decisions. The model, calibrated to pre-reform farm-level data in the Philippines, implies that on impact the land reform reduces average farm size by 34% and agricultural productivity by 17%. The government assignment of land and the ban on its transfer are key for the magnitude of the results since a market allocation of the above-ceiling land produces about 1/3 of the size and productivity effects. These results emphasize the potential role of land market efficiency for misallocation and productivity in the agricultural sector.
For helpful comments we are grateful to the Editor and four anonymous referees, Berta Esteve-Vollart, Doug Gollin, Charles Gottlieb, Hugo Hopenhayn, David Lagakos, Todd Schoellman, Sebastian Sotelo, and seminar participants at the 2012 SED meetings in Cyprus, INEGI-ITAM Workshop on Productivity, 2013 LACEA meetings in Mexico City, 2014 NASM meetings in Minneapolis, 2014 ESEM meetings in Toulouse, Oxford, IIES-Stockholm, McMaster, Ryerson, York, Brown, and Montreal. All remaining errors are our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Tasso Adamopoulos & Diego Restuccia, 2020. "Land Reform and Productivity: A Quantitative Analysis with Micro Data," American Economic Journal: Macroeconomics, vol 12(3), pages 1-39. citation courtesy of