Working Paper: NBER ID: w25440
Authors: Douglas Gollin; Christopher R. Udry
Abstract: Standard measures of productivity display enormous dispersion across farms in Africa. Crop yields and input intensities appear to vary greatly, seemingly in conflict with a model of efficient allocation across farms. In this paper, we present a theoretical framework for distinguishing between measurement error, unobserved heterogeneity, and potential misallocation. Using rich panel data from farms in Tanzania and Uganda, we estimate our model using a flexible specification in which we allow for several kinds of measurement error and heterogeneity. We find that measurement error and heterogeneity together account for a large fraction – as much as ninety percent -- of the dispersion in measured productivity. In contrast to some previous estimates, we suggest that the potential for efficiency gains through reallocation of land across farms and farmers may be relatively modest.
Keywords: productivity; agriculture; measurement error; heterogeneity; Africa
JEL Codes: O1; O11; O12; O13; Q1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Measurement Error (C83) | Productivity Dispersion (O49) |
| Unobserved Heterogeneity (C21) | Productivity Dispersion (O49) |
| Misallocation (D61) | Productivity Dispersion (O49) |
| Measurement Error and Unobserved Heterogeneity (C21) | Productivity Dispersion (O49) |