The Size Distribution of Farms and International Productivity Differences

American Economic Review · 2014 · Volume 104 · Issue 6

Abstract

We study the determinants of differences in farm-size across countries and their impact on agricultural and aggregate productivity using a quantitative sectoral model featuring a distribution of farms. Measured aggregate factors (capital, land, economy-wide productivity) account for ¼ of the observed differences in farm size and productivity. Policies and institutions that misallocate resources across farms have the potential to account for the remaining differences. Exploiting within-country variation in crop-specific price distortions and their correlation with farm size, we construct a cross-country measure of farm-size distortions which together with aggregate factors accounts for ½ of the cross-country differences in size and productivity.

Keywords

Production, Cost, Capital, Total Factor, and Multifactor Productivity, Capacity, Human Capital, Skills, Occupational Choice, Labor Productivity, Agricultural Labor Markets, Pricing, and Market Structure, Size Distribution of Firms, Economic Development: Agriculture, Natural Resources, Energy, Environment, Other Primary Products, Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets, Agricultural Policy, Food Policy

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