Factor Market Failures and the Adoption of Irrigation in Rwanda
American Economic Review
vol. 112,
no. 7, July 2022
(pp. 2316-52)
Abstract
Factor market failures can limit adoption of profitable technologies. We leverage a plot-level spatial regression discontinuity design in the context of irrigation use by farmers provided free access to water. Using irrigation boosts profits by 43–62 percent. Yet, farmers only irrigate 30 percent of plots because of labor costs. We demonstrate inefficient irrigation use, by showing farmers irrigating one plot reduce their irrigation use on other plots. This inefficiency is largest for smaller households and wealthier households, suggesting labor market frictions constrain use of irrigation.Citation
Jones, Maria, Florence Kondylis, John Loeser, and Jeremy Magruder. 2022. "Factor Market Failures and the Adoption of Irrigation in Rwanda." American Economic Review, 112 (7): 2316-52. DOI: 10.1257/aer.20210059Additional Materials
JEL Classification
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
- Q12 Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- Q15 Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
- Q16 Agricultural R&D; Agricultural Technology; Biofuels; Agricultural Extension Services