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Are small farms really more productive than large farms?

Author

Listed:
  • Fernando Aragón

    (Simon Fraser University)

  • Diego Restuccia

    (University of Toronto)

  • Juan Pablo Rud

    (Royal Holloway, University of London/IFS)

Abstract
This paper shows that the study of the farm size-productivity relationship hinges on the choice of productivity measure. Our main insight is that using yields, a partial measure of productivity commonly used in the literature, may not be informative. This occurs because, in addition to total factor productivity, yields pick up input markets distortions and deviations from constant returns to scale. We examine the empirical relevance of this insight using detailed microdata from Uganda. We find an inverse relationship between yields and farm size. We show the relationship turns positive when accounting for market distortions and returns to scale; or when using a farm- specific component of total factor productivity.

Suggested Citation

  • Fernando Aragón & Diego Restuccia & Juan Pablo Rud, 2021. "Are small farms really more productive than large farms?," Working Papers 44, Red Nacional de Investigadores en Economía (RedNIE).
    • Handle: RePEc:aoz:wpaper:44
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    More about this item

    Keywords

    Farm size productivity yields land markets distortions agriculture policy;

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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