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Heterogeneity, Measurement Error, and Misallocation in African Agriculture: A Comment

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  • Fernando Aragon
  • Diego Restuccia
  • Juan Pablo Rud

Abstract

Gollin and Udry (2021) estimate the contribution of mismeasurement to productivity dispersion among production units and conclude that previous studies have overestimated the potential efficiency gains from factor reallocation. We show that this conclusion is incorrect based on their own empirical evidence, which instead corroborates the importance of misallocation emphasized in the macro-development literature. We also point out important limitations in the implementation of the plot-level analysis that overstates the importance of mismeasurement in understanding productivity differences.

Suggested Citation

  • Fernando Aragon & Diego Restuccia & Juan Pablo Rud, 2021. "Heterogeneity, Measurement Error, and Misallocation in African Agriculture: A Comment," Working Papers tecipa-697, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-697
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    References listed on IDEAS

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    1. Tasso Adamopoulos & Diego Restuccia, 2014. "The Size Distribution of Farms and International Productivity Differences," American Economic Review, American Economic Association, vol. 104(6), pages 1667-1697, June.
    2. Chaoran Chen & Diego Restuccia & Raul Santaeulalia-Llopis, 2022. "The Effects of Land Markets on Resource Allocation and Agricultural Productivity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 41-54, July.
    3. Douglas Gollin & Christopher Udry, 2021. "Heterogeneity, Measurement Error, and Misallocation: Evidence from African Agriculture," Journal of Political Economy, University of Chicago Press, vol. 129(1), pages 1-80.
    4. Aragón, Fernando M. & Restuccia, Diego & Rud, Juan Pablo, 2022. "Are small farms really more productive than large farms?," Food Policy, Elsevier, vol. 106(C).
    5. Markus Goldstein & Christopher Udry, 2008. "The Profits of Power: Land Rights and Agricultural Investment in Ghana," Journal of Political Economy, University of Chicago Press, vol. 116(6), pages 981-1022, December.
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    7. Mark Bils, 2017. "Misallocation or Mismeasurement?," 2017 Meeting Papers 715, Society for Economic Dynamics.
    8. Tasso Adamopoulos & Loren Brandt & Jessica Leight & Diego Restuccia, 2022. "Misallocation, Selection, and Productivity: A Quantitative Analysis With Panel Data From China," Econometrica, Econometric Society, vol. 90(3), pages 1261-1282, May.
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    13. Abay, Kibrom A. & Abate, Gashaw T. & Barrett, Christopher B. & Bernard, Tanguy, 2019. "Correlated non-classical measurement errors, ‘Second best’ policy inference, and the inverse size-productivity relationship in agriculture," Journal of Development Economics, Elsevier, vol. 139(C), pages 171-184.
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    Cited by:

    1. Marijn A. Bolhuis & Swapnika R. Rachapalli & Diego Restuccia, 2021. "Misallocation in Indian Agriculture," NBER Working Papers 29363, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Plot; farm; misallocation; measurement error; agriculture; land institutions; distortions.;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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