The Relationship between Farm Size and Productivity in Agriculture: Evidence from Maize Production in Northern China

Abstract

The relationship between farm size and productivity has long been a topic of debate in development economics. Using farm-level panel data from 2003 to 2013, we investigate the relationship between maize yield and farm size in Northern China. After controlling for farm-specific characteristics, we restore a mild U-shaped relationship between maize yield and cropping area from the apparent inverse U-shaped curve. This suggests that an inverse farm size-productivity relationship persists for most small-sized farms. Further analyses demonstrate that farmer input choice between labor and capital is likely to smooth the non-linear farm size-productivity relationship, with capital use being more likely to affect the farm size-productivity relationship at a larger scale. The findings imply that subsidizing farmers to rent land without helping them become better-equipped could result in resource misallocation towards larger farms using less-efficient labor-intensive technologies.