Land Reform and Productivity: A Quantitative Analysis with Micro Data

Principal Investigator(s): View help for Principal Investigator(s) Tasso Adamopoulos, York University (Canada); Diego Restuccia, University of Toronto

Version: View help for Version V1

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Project Citation:

Adamopoulos, Tasso, and Restuccia, Diego. Land Reform and Productivity: A Quantitative Analysis with Micro Data. Nashville, TN: American Economic Association [publisher], 2020. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2020-06-23. https://doi.org/10.3886/E110982V1

Project Description

Summary: 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 percent and agricultural productivity by 17 percent. 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.

Scope of Project

Subject Terms: agriculture; productivity; land reform; misallocation; land market; crop choice

JEL Classification:
      O11 Macroeconomic Analyses of Economic Development
      O13 Agriculture • Natural Resources • Energy • Environment • Other Primary Products
      O14 Industrialization • Manufacturing and Service Industries • Choice of Technology
      O40 General
      O53 Asia including Middle East
      Q10 General
      R20 General
      R52 Land Use and Other Regulations
      R52

Geographic Coverage: Aggregate and sectoral data for the Philippines, household level data from Phillipines (Cash Cropping Project) Bukidnon province, island of Mindanao

Time Period(s): 1984 – 2004 (Four rounds interviews 1984-5 and 2003-4)

Methodology

Data Source:

Several sources of data, see paper for more details:

Aggregate and agricultural census data from Philippines

Philippines cash cropping project, panel of households

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Published Versions

V1 [2020-06-23]

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