Three essays on productivity, efficiency, and the role of social networks
Mekonnen, Dawit Kelemework
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In the first chapter of the dissertation, we study the effects of informal labor sharing arrangements and other social interactions on farmers' productivity in a developing country context, testing whether these types of social and work interactions lead to productivity gains through learning, synergy, or both. Using a rich panel data set of Ethiopian subsistence farmers, we estimate a distance function of grains production and find large productivity gains (approximately 20 percent) from labor sharing due to synergy effects that boost labor productivity. We find no learning effects from labor sharing as the productivity gains observed in years with labor sharing disappear in following years if the farmers do not continue to employ labor sharing. The results do not encourage policies based on passive learning, and provide evidence in favor of extension programs and off-farm works. The second chapter of the dissertation explores the level of technical efficiency of small-scale farmers as well as factors that determine the level of efficiency. We find that the most important factors determining farmers' efficiency are access to the public extension system, participation in off-farm activities, taking advantage of labor sharing arrangements, gender of the household head, and the extent to which farmers are forced to produce on marginal and steeply sloped plots. We find that the average farmer's technical efficiency is less than 60 percent, so bringing farmers toward the production frontier using the successful policies identified could yield large, economically significant productivity gains. The third chapter examines how different components of an agricultural innovation system interact to determine the level of technical inefficiency of agriculture for a panel of 45 low-income and lower-middle-income countries between 2008 and 2010. Results show that the mean level of relative technical efficiency among the sampled countries is about 97 percent, showing limited potential (approximately 3.1 percent) to increase production at the current level of inputs and technology. This calls for a focus on investments that push the technology frontier outward such as irrigation. High quality education and health expenditure per capita are found to improve the efficiency of agricultural production in these countries.