Central Data Catalog

Citation Information

Type Journal Article - Unpublished manuscript, University of Toronto, December
Title Land Reform and Productivity: A Quantitative Analysis with Micro Data
Publication (Day/Month/Year) 2014
Page numbers 1667-97
URL https://www.economics.utoronto.ca/public/workingPapers/tecipa-540.pdf
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 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, a land reform reduces agricultural productivity not only by misallocating resources
from large/high productivity farms to incumbent small/low productivity farms, but also by distorting
farmers’ occupation and technology adoption 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 only
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.

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