Abstract: We assess the effects of a major land-policy change on farm size and agricultural productivity using a quantitative model and micro-level data. The 1988 land reform in the Philippines imposed a ceiling on land holdings and severely restricted the transferability of the redistributed land. In the model, the land reform reduces agricultural productivity not only by misallocating resources across farms, but also by distorting farmers' occupation and technology adoption decisions. On impact the reform reduces farm size by 34% and agricultural productivity by 17%. A market allocation of the above-ceiling land produces only 1/3 of the size and productivity effects.
Keywords: agriculture, misallocation, within-farm productivity, land reform.
JEL Classification: O11, O14, O4.