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Heterogeneity, Measurement Error, and Misallocation: Evidence from African Agriculture

Dates:
  • Thu 18 Oct 2018 11.00 - 12.15
  Add to Calendar 2018-10-18 11:00 2018-10-18 12:15 Europe/Paris Heterogeneity, Measurement Error, and Misallocation: Evidence from African Agriculture

Standard measures of productivity display enormous dispersion across farms in Africa. Crop yields and input intensities appear to vary greatly, seemingly in conflict with a model of efficient allocation across farms. In this paper, we present a theoretical framework for distinguishing between measurement error, unobserved heterogeneity, and potential misallocation. Using rich panel data from farms in Tanzania and Uganda, we estimate our model using a highly flexible specification in which we allow for several kinds of measurement error and heterogeneity. We find that measurement error and heterogeneity together account for a large fraction – perhaps two-thirds to three-quarters -- of the dispersion in measured productivity. We suggest that the potential for efficiency gains through reallocation may be relatively modest.

Co-author: Doug Gollin

Seminar Room,3rd Floor,V. la Fonte DD/MM/YYYY
  Seminar Room,3rd Floor,V. la Fonte

Standard measures of productivity display enormous dispersion across farms in Africa. Crop yields and input intensities appear to vary greatly, seemingly in conflict with a model of efficient allocation across farms. In this paper, we present a theoretical framework for distinguishing between measurement error, unobserved heterogeneity, and potential misallocation. Using rich panel data from farms in Tanzania and Uganda, we estimate our model using a highly flexible specification in which we allow for several kinds of measurement error and heterogeneity. We find that measurement error and heterogeneity together account for a large fraction – perhaps two-thirds to three-quarters -- of the dispersion in measured productivity. We suggest that the potential for efficiency gains through reallocation may be relatively modest.

Co-author: Doug Gollin


Location:
Seminar Room,3rd Floor,V. la Fonte

Affiliation:
Department of Economics

Type:
Seminar

Organiser:
Prof. Ramon Marimon (EUI - Professor of Economics and Pierre Werner Chair)

Contact:
Rossella Corridori (Eco) - Send a mail

Speaker:
Christopher Udry (Northwestern University)
 
 
 

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