UC Davis

This dissertation is composed of three essays that study aspects related to the way in which agricultural land and labor markets operate, with a special emphasis on the particularities of agricultural input markets in developing countries. The first chapter investigates how government restrictions on land markets impact the agricultural sector, and assesses whether such restrictions can curb distortions that stem from the presence of market power. To do so, I develop a general-equilibrium production model in which large landholders exert market power in both land and labor markets, and where there are limits on land accumulation. Restrictions reduce the inefficiencies arising from market power, but also hinder productive reallocation, with the net effect on productivity depending on initial levels of land concentration. I empirically test the model’s predictions by estimating how a law imposing municipality-specific limits on landholdings in Colombia affected productivity, land concentration, and agricultural labor markets. To estimate the impact of the law, I combine a collection of rich micro-level data sources which include a newly built dataset on municipal agricultural productivity. Exploiting plausibly exogenous variation in restriction stringency across bordering municipalities, I find that imposing restrictions caused a permanent reduction in productivity and only modest reductions in overall land inequality. However, restrictions also increased both agricultural workers’ earnings and the employment share in agriculture, suggesting they were beneficial to landless wage laborers by reducing labor market power.

The second chapter (co-authored with Nicolás de Roux, Margarita Gáfaro, Ana María Ibáñez, and Heitor Pellegrina) studies the effect of weather shocks on rural land sales and the farm size distribution. Using a unique administrative dataset with transaction-level information and a land registry covering most of Colombia’s farmland, it shows that extreme temperature events increase the frequency of land sales and decrease the average farm size within municipalities. These results are driven by small farms being subdivided and purchased by previously landless owners, with no evidence of weather shocks leading to the consolidation of small farms into larger holdings. The effects of extreme temperature on land sales are stronger in poorer and more isolated municipalities, where landowners are also less likely to take out land mortgages after a shock. To explain these patterns and explore how they can be exacerbated by underdevelopment, this chapter further develops an intertemporal, two-sector model where agents face a subsistence consumption constraint. Taken together, the model and the empirical findings preesented in this chapter highlight how climate-induced distress land sales are a relevant margin of adjustment that can have large distributional and efficiency implications for the agricultural sector of developing economies.

The third chapter (co-authored with Ashish Shenoy) focuses on the effect that variations in migrant worker inflows have on agricultural labor markets in destination economies. Using information on migratory flows for every Mexican municipality and U.S. county pair throughout the 2006–2019 period, the chapter shows estimates on the effect that variations in Mexican migration flows have on U.S. agricultural labor-market outcomes. We instrument for migration-driven changes in local labor supply using a shift-share variable that combines Mexican municipality-level violence levels with preexisting migration network patterns. Our estimates show that, in the short run, decreasing migration rates put upward pressure on wages across all types of agricultural workers, and cause a large increase in the number of H-2A seasonal worker visas requested by employers. Conversely, in the long run, decreasing migration rates lead to lower wages in agriculture accompanied by slight reductions in employment levels. Regarding the mechanisms driving this result, we find that an exogenous decrease in the cumulative number of migrant arriving to a county during this period led to reductions in the acreage planted with labor-intensive crops, higher rates of mechanization, and lower average farmland values.