Insights into land size and productivity in Ethiopia: What do data and heterogenous analysis reveal?

Abstract

This study investigates whether the historical inverse relationship (IR) between land (farm and plot) size and productivity holds for Ethiopia farms. The study uses plot-level and household-level data from the three waves of the Ethiopia Socioeconomic Survey. The main finding, which confirms previous studies, is that the plot-size IR holds when productivity measurement is based on self-reported yields. However, the effects were reversed when we used crop-cut yields. Including labor inputs significantly reduces the magnitude of the coefficients on land size but not the sign. Finally, the quantile regression reveals interesting findings. These are: (1) a strong positive effect of farm (and plot) size on productivity; (2) the magnitude of the effect decreases monotonically with quantile; (3) farm size displays a robust negative impact on gross revenue and the magnitude of the effect increases (in absolute terms) monotonically with quantiles; (4) the effect of farm (and plot) size on productivity decreases in magnitude when we control for labor input; (5) the IR between farm (and plot) size and total and family labor was negative and significant and the effect increases (in absolute terms) monotonically with quantiles.