Incomplete markets, crop portfolios, and agricultural productivity
Bibliographic Data
| ID | 24214334 |
|---|---|
| Authors | Albert Rodríguez-Sala (0000-0002-0850-0822) |
| Year | 2027 |
| Volume | 185 |
| Pages | 103944 |
| Publication date | 2027-02-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Journal of Development Economics (JOURNAL) |
| Journal identifiers | ISSN: 0304-3878 • E-ISSN: 1872-6089 |
| Publisher | Elsevier BV (PUBLISHER) |
| DOI | 10.1016/j.jdeveco.2026.103944 |
| OpenAlex | W7214620839 |
| Language | EN |
| References cited | 41 |
Using the Uganda National Panel Survey, I document that farmers face a trade-off between crop yields and risk, that most grow both high- and low-yield crops, and that poorer farmers concentrate on the low-yield, low-risk ones. I then develop an incomplete-markets model with a crop-portfolio choice, in which households trade off income returns against consumption smoothing. Wealth-poor households optimally under-invest in intermediates and shift toward safer crops. Crop portfolios, intermediate input use, and the wealth distribution are jointly determined in equilibrium. The model also reproduces the low pass-through of both income inequality and income volatility into consumption. Calibrated to rural Uganda, it implies that completing markets raises agricultural productivity by 12.8%, with 15.8% of the gain coming from eliminating the misallocation of inputs across farmers and crops. Consumption rises by 17.6% and welfare by 17.4%, with income inequality rising slightly and consumption inequality unchanged.
Agricultural productivity · Consumption smoothing · earnings volatility · income inequality · Incomplete markets · market completion · risk trade-offs · rural households · Uganda · Wealth distribution · Agricultural risk and resilience · Economic theories and models · Economics of Agriculture and Food Markets
Savings by and for the Poor
Chapter 9 Accounting for Cross-Country Income Differences
Agricultural Decisions after Relaxing Credit and Risk Constraints
Informal Insurance Arrangements with Limited Commitment
Agriculture and aggregate productivity
Informal Risk Sharing, Index Insurance, and Risk Taking in Developing Countries
Risk and Insurance in a Rural Credit Market
Does Income Inequality Lead to Consumption Inequality? Evidence and Theory1
Uninsured Idiosyncratic Risk and Aggregate Saving
Networks and Misallocation
The Size Distribution of Farms and International Productivity Differences
Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)
Insurance market efficiency and crop choices in Pakistan
Consumption smoothing? Livestock, insurance and drought in rural Burkina Faso
Land use restrictions, misallocation in agriculture, and aggregate productivity in Vietnam
The consumption, income, and wealth of the poorest
Communal land and agricultural productivity
Consumption risk, technology adoption and poverty traps
Risk-sharing networks in rural Philippines
Productivity, transport costs and subsistence agriculture
Drought and saving in West Africa
Cost of Business Cycles with Indivisibilities and Liquidity Constraints
Accounting for the U.S. Earnings and Wealth Inequality
Credit Market Constraints, Consumption Smoothing, and the Accumulation of Durable Production Assets in Low-Income Countries
How Well Does the U.S. Social Insurance System Provide Social Insurance
Consumption and Income Seasonality in Thailand
Wealth, Weather Risk and the Composition and Profitability of Agricultural Investments
Risk, Crop Choice, and Savings
Income Smoothing and Consumption Smoothing
| Highly cited | No |
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