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Are small farms really more productive than large farms?

Author: Fernando M Aragon Sanchez; Diego Restuccia; Juan-Pablo Rud; National Bureau of Economic Research,
Publisher: Cambridge, Mass. : National Bureau of Economic Research, 2019.
Series: Working paper series (National Bureau of Economic Research), no. 26331.
Edition/Format:   eBook : Document : EnglishView all editions and formats
Summary:
We revisit the long-standing empirical evidence of an inverse relationship between farm size and productivity using rich microdata from Uganda. We show that farm size is negatively related to yields (output per hectare), as commonly found in the literature, but positively related to farm productivity (a farm-specific component of total factor productivity). These conflicting results do not arise because of omitted  Read more...
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Material Type: Document, Internet resource
Document Type: Internet Resource, Computer File
All Authors / Contributors: Fernando M Aragon Sanchez; Diego Restuccia; Juan-Pablo Rud; National Bureau of Economic Research,
OCLC Number: 1123172447
Notes: "September 2019"
Description: 1 online resource (51 pages) : illustrations, maps.
Series Title: Working paper series (National Bureau of Economic Research), no. 26331.
Responsibility: Fernando M. Aragon Sanchez, Diego Restuccia, Juan Pablo Rud.

Abstract:

We revisit the long-standing empirical evidence of an inverse relationship between farm size and productivity using rich microdata from Uganda. We show that farm size is negatively related to yields (output per hectare), as commonly found in the literature, but positively related to farm productivity (a farm-specific component of total factor productivity). These conflicting results do not arise because of omitted variables such as land quality, measurement error in output or inputs, or specification issues. Instead, we reconcile the findings emphasizing the role of farm-specific distortions and returns to scale in traditional farm production. We exploit unique regional variation in land tenure regimes in Uganda in evaluating the role of farm-specific distortions. Our findings point to the limited value of yields (or land productivity) in establishing the farm size-productivity relationship. More generally, we demonstrate the limitation of using farm size in guiding policy applications.

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