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Land market distortions and aggregate agricultural productivity: Evidence from Guatemala

Author

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  • Britos, Braulio
  • Hernandez, Manuel A.
  • Robles, Miguel
  • Trupkin, Danilo R.

Abstract

Farm size and land allocation are important factors in explaining lagging agricultural productivity in developing countries. This paper examines the effect of land market imperfections on land allocation across farmers and aggregate agricultural productivity. We develop a theoretical framework to model the optimal size distribution of farms and assess to what extent market imperfections can explain non-optimal land allocation and output inefficiency. We measure these distortions for the case of Guatemala using agricultural census microdata. We find that due to land market imperfections aggregate output is 19% below its efficient level for both maize and beans and 31% below for coffee, which are three major crops produced nationwide. We also observe that areas with higher distortions show higher land price dispersion and less active rental markets. The degree of land market distortions across areas co-variate to some extent with road accessibility, ethnicity, and education.

Suggested Citation

  • Britos, Braulio & Hernandez, Manuel A. & Robles, Miguel & Trupkin, Danilo R., 2022. "Land market distortions and aggregate agricultural productivity: Evidence from Guatemala," Journal of Development Economics, Elsevier, vol. 155(C).
    • Handle: RePEc:eee:deveco:v:155:y:2022:i:c:s0304387821001449
    DOI: 10.1016/j.jdeveco.2021.102787
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    More about this item

    Keywords

    Land market distortions; Output inefficiency; Agricultural productivity; Guatemala;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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