Agricultural land consolidation, labor allocation and land productivity: A case study of plot exchange policy in Vietnam

Abstract

Studies on the impacts of agricultural land consolidation have mostly used the household plot number as a proxy. Instead, this study exploits the variation in household participation in plot exchange, a policy for consolidating cropland in Vietnam, to evaluate the impacts of land consolidation on household labor allocation and farmland productivity. Using data from the Vietnam Access to Resources Household Survey (VARHS), we construct a panel household dataset from 2010 to 2016. This sample consists of 618 households in two provinces, Ha Tay and Nghe An, where plot exchange was implemented intensively in the period of study. We apply two-way fixed effects regression to mitigate the endogeneity in household participation in plot exchange. The results indicate that plot exchange halved the number of household plots dedicated to annual crop production. While the impact on land productivity was statistically insignificant, land consolidation via plot exchange dramatically reduced household labor allocated to crop production, especially rice production. Further analyses reveal that the labor effects may come from improved farm irrigation and increased machine rentals.