Working Paper: NBER ID: w25780
Authors: Tasso Adamopoulos; Diego Restuccia
Abstract: 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 farm lands. We study this reform in the context of an industry model of agriculture with a non-degenerate 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 pre-reform farm-level data in the Philippines, implies that on impact the land reform reduces average farm size by 34% and agricultural productivity by 17%. 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 1/3 of the size and productivity effects. These results emphasize the potential role of land market efficiency for misallocation and productivity in the agricultural sector.
Keywords: land reform; agricultural productivity; Philippines; quantitative model; microdata
JEL Codes: O11; O13; O14; O4; O53; Q1; R2; R52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| government intervention in land redistribution (P26) | average farm size (Q12) |
| government intervention in land redistribution (P26) | agricultural productivity (Q11) |
| absence of government mandates (H10) | size and productivity effects (O49) |
| land reform (Q15) | resource reallocation (Q20) |
| land reform (Q15) | farmers' occupational and technology choices (Q12) |
| land reform (Q15) | productivity losses (J17) |
| weak enforcement of the reform (P37) | productivity drop (O49) |
| 1988 land reform in the Philippines (H13) | average farm size (Q12) |
| 1988 land reform in the Philippines (H13) | agricultural productivity (Q11) |