C an unobserved heterogeneity in farmer ability explain theinverse relationship between farm size and productivity

The well-known inverse relationship between farm size and productivity is usually explained in terms ofdiminishing returns with respect to land and other inputs coupled with various types of market frictions thatprevent the efficient allocation of land across farms. We show that even in the absence of diminishing returnsone can provide an alternative explanation for this phenomenon using endogenous occupational choice andheterogeneity with respect to farming skills.[...]