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  3. American Economic Journal: Macroeconomics
  4. July 2020
  5. Land Reform and Productivity: A Quantitative Analysis with Micro Data

American Economic Journal:
Macroeconomics

ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)

Land Reform and Productivity: A Quantitative Analysis with Micro Data

  • Tasso Adamopoulos
  • Diego Restuccia
American Economic Journal: Macroeconomics
vol. 12, no. 3, July 2020
(pp. 1–39)
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Abstract

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 farmlands. We study this reform in the context of an industry model of agriculture with a nondegenerate 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 prereform 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 one-third of the size and productivity effects. These results emphasize the potential role of land market efficiency for misallocation and productivity in the agricultural sector.

Citation

Adamopoulos, Tasso, and Diego Restuccia. 2020. "Land Reform and Productivity: A Quantitative Analysis with Micro Data." American Economic Journal: Macroeconomics 12 (3): 1–39. DOI: 10.1257/mac.20150222

Additional Materials

JEL Classification

  • D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
  • O11 Macroeconomic Analyses of Economic Development
  • 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
  • Q18 Agricultural Policy; Food Policy
  • Q24 Renewable Resources and Conservation: Land