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Working paper 697

Fernando Aragon, Diego Restuccia, Juan Pablo Rud, "Heterogeneity, Measurement Error, and Misallocation in African Agriculture: A Comment", 2021-05-27
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Abstract: Gollin and Udry (2021) estimate the contribution of mismeasurement to productivity dispersion among production units and conclude that previous studies have overestimated the potential efficiency gains from factor reallocation. We show that this conclusion is incorrect based on their own empirical evidence, which instead corroborates the importance of misallocation emphasized in the macro-development literature. We also point out important limitations in the implementation of the plot-level analysis that overstates the importance of mismeasurement in understanding productivity differences.

Keywords: Plot, farm, misallocation, measurement error, agriculture, land institutions, distortions.

JEL Classification: O4.