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.

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