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.
Adamopoulos, Tasso, and Diego Restuccia.
"Land Reform and Productivity: A Quantitative Analysis with Micro Data."
American Economic Journal: Macroeconomics,
Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
Macroeconomic Analyses of Economic Development
Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
Agricultural Policy; Food Policy
Renewable Resources and Conservation: Land