Misallocation, Selection and Productivity: A Quantitative Analysis with Panel Data from China

Tasso Adamopoulos, Loren Brandt (), Jessica Leight and Diego Restuccia

No 23039, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We use household-level panel data from China and a quantitative framework to document the extent and consequences of factor misallocation in agriculture. We find that there are substantial within- village frictions in both the land and capital markets linked to land institutions in rural China that disproportionately constrain the more productive farmers. These frictions reduce aggregate agricultural productivity by affecting two key margins: (1) the allocation of resources across farmers (misallocation) and (2) the allocation of workers across sectors, in particular the type of farmers who operate in agriculture (selection). Selection substantially amplifies the productivity effect of distortionary policies by affecting occupational choices that worsen average ability in agriculture.

JEL-codes: O11 O14 O4 (search for similar items in EconPapers)
Date: 2017-01
New Economics Papers: this item is included in nep-agr, nep-cna, nep-eff, nep-opm, nep-tid and nep-tra
Note: DEV EFG PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (93)

Published as Tasso Adamopoulos & Loren Brandt & Jessica Leight & Diego Restuccia, 2022. "Misallocation, Selection, and Productivity: A Quantitative Analysis With Panel Data From China," Econometrica, Econometric Society, vol. 90(3), pages 1261-1282, May.

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