Misallocation and Shocks: Evidence from Vietnamese villages

Yanos Zylberberg (Bristol University)

December 2, 2021, 11:00–12:30

Room Auditorium 4

Behavior, Institutions, and Development seminar


Agricultural productivity is low in rural economies compared to that of developed economies, and there is disparity in measured productivity across farms. The dispersion of measured productivity might reflect (i) volatile, fast-moving conditions and (ii) sluggish adjustments in agricultural production to shocks, e.g., due to market frictions or feasibility constraints. This paper sheds light on the existence and nature of such imperfect adjustments by exploiting large shocks affecting the overall returns to production factors across crops, by measuring the adjustment of production (factors, inputs and cropping patterns) across and within farms, and by estimating a dynamic model of farm production. We use the model to assess the role of rigidities in explaining the dispersion of agricultural productivity, but also, and mostly, to identify the respective effects of market frictions versus technological constraints. (joint with Andre Groeger, Luis Rojas and Raul Santaeulalia-Llopis).