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This paper uses the recently collected
Living Standard Measurement Study-Integrated Surveys on
Agriculture Initiative data sets from five countries in
Sub-Saharan Africa to provide a comprehensive overview of
land and labor market participation by agrarian households
and to formally test for failures in factor markets. Under
complete and competitive markets, households can solve their
consumption and production problems separately, so that
household factor endowments do not predict input demand.
This paper implements a simple, theoretically grounded test
of this separation hypothesis, which can be interpreted as a
reduced form test of factor market failure. In all five
study countries, the analysis finds strong evidence of
factor market failure. Moreover, those failures appear
general and structural, not specific to subpopulations
defined by gender or geography.
