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Assessing misallocation in agriculture: plots versus farms

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  • Fernando Aragon
  • Diego Restuccia
  • Juan Pablo Rud

Abstract

We assess the extent and cost of misallocation in agriculture in less-developed countries comparing the analysis at the plot and farm levels. Using detailed data from Uganda, we show that the plot-level analysis leads to extremely large estimates of reallocation gains, even after adjusting for measurement error and unobserved heterogeneity. These results reflect two empirical limitations of the plot as unit of analysis: excess measurement error and near constant returns to scale production estimates. We find limited evidence of substantial measurement error at the farm level.

Suggested Citation

  • Fernando Aragon & Diego Restuccia & Juan Pablo Rud, 2022. "Assessing misallocation in agriculture: plots versus farms," Working Papers tecipa-718, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-718
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    References listed on IDEAS

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    Cited by:

    1. Chaoran Chen & Diego Restuccia & Raül Santaeulàlia-Llopis, 2023. "Land Misallocation and Productivity," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 441-465, April.
    2. Marijn A. Bolhuis & Swapnika R. Rachapalli & Diego Restuccia, 2021. "Misallocation in Indian Agriculture," NBER Working Papers 29363, National Bureau of Economic Research, Inc.
    3. Stephen Ayerst & Loren Brandt & Diego Restuccia, 2023. "Distortions, Producer Dynamics, and Aggregate Productivity: A General Equilibrium Analysis," Working Papers tecipa-748, University of Toronto, Department of Economics.

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    More about this item

    Keywords

    plot; farm; misallocation; measurement error; agriculture; distortions.;
    All these keywords.

    JEL classification:

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

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