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on Efficiency and Productivity |
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Issue of 2016‒06‒14
24 papers chosen by |
| By: | Perez-Quesada, Gabriela; García-Suárez, Federico |
| Abstract: | The dairy sector is one of the most influential sectors and plays an important role in the economic and social structure of Uruguay. Assuring and enhancing the dairy sector productivity and efficiency represent an important challenge in order to improve the competitiveness of the sector and achieve a sustained economic growth. Consequently, the overall objective of this study is to analyze the efficiency performance of dairy farms in Uruguay. Using a crosssectional database this paper estimates a Cobb-Douglas stochastic production frontier and technical inefficiency model for dairy farms to determine the effect of each input in the production frontier and the principal factors that explain differences on farm efficiency. Results shows that highest effect on production is the number of milking cows followed by the total consumption of feed including concentrated feed, hay and ensilage. Although, veterinary, agronomic or accounting assistance matter, the major determinant of efficiency differences is the artificial insemination. Overall farm profiles indicate that those in the high efficiency group achieve a higher level of milk production than those less efficient; and they are larger in terms of the herd size, used labor, feed consumption and area under cultivated forage than those in lower efficiency group. |
| Keywords: | stochastic production frontier, Uruguayan dairy farms, technical efficiency, crosssectional data, Agribusiness, Farm Management, Production Economics, Productivity Analysis, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:235743&r=eff |
| By: | Rolf Färe (Oregon State University); Xinju He (Hong Kong Baptist University); Sungko Li (Hong Kong Baptist University); Valentin Zelenyuk (School of Economics, The University of Queensland) |
| Abstract: | Measuring profit efficiency is a challenging task. This paper synthesizes existing approaches to form a general Farrell-type model of profit efficiency. Our derivations help us unveil new and interesting relationship between existing profit efficiency measures and the Farrell-type profit efficiency measures. In turn, this helps us establishing a complete framework of studying efficiency behavior of firms, where the profit efficiency measure satisfies some desirable properties and contains Farrell output-oriented or input-oriented measures of technical efficiency and allocative efficiency as multiplicative elements. The new component, revenue efficient allocative efficiency, introduced in this paper can help firms to make decision and has not been studied in the literature before. |
| JEL: | C44 D24 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uqcepa:115&r=eff |
| By: | Hasan, Iftekhar; Kobeissi, Nada; Liu, Liuling; Wang, Haizhi |
| Abstract: | This study treats firm productivity as an accumulation of productive intangibles and posits that stakeholder engagement associated with better corporate social performance helps develop such intangibles. We hypothesize that because shareholders factor improved productive efficiency into stock price, productivity mediates the relationship between corporate social and financial performance. Furthermore, we argue that key stakeholders’ social considerations are more valuable for firms with higher levels of discretionary cash and income stream uncertainty. Therefore, we hypothesize that those two contingencies moderate the mediated process of corporate social performance with financial performance. Our analysis, based on a comprehensive longitudinal dataset of U.S. manufacturing firms from 1992 to 2009, lends strong support for these hypotheses. In short, this paper uncovers a productivity-based, context-dependent mechanism underlying the relationship between corporate social performance and financial performance. |
| Keywords: | corporate social responsibility, corporate financial performance, total factor productivity, stakeholder management, discretionary cash, organizational risk |
| Date: | 2016–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofrdp:2016_007&r=eff |
| By: | Nehring, Richard; Erickson, Kenneth; Michael, Harris; Hallahan, Charlie; Katchova, Ani |
| Abstract: | This study uses stochastic production frontier (SPF) methods to estimate the impact of urban influence on the cost of production for traditional corn/soybeans farms in the Heartland (excepting Missouri), the Southern Seaboard (excepting Virginia and Alabama) and the Prairie Gateway. We hypothesize that urban influence decreases the technical efficiency of these farms. Although these regions are not entirely subject to urban influence, some parts of these areas are. We find that farmers in urban-influenced locations are less technically efficient than farmers in rural locations in all three regions examined. During 2002-2014, stochastic production frontier procedures indicate that increasing urban influence leads to a significant decrease in technical efficiency. Our statistical analysis clearly bears out the refrain in popular literature that urban proximity raises the cost for, and decreases the viability of, traditional farms. |
| Keywords: | input distance function, scale efficiency, stochastic production frontier, technical efficiency, urban-influence., Institutional and Behavioral Economics, Land Economics/Use, Production Economics, |
| Date: | 2016–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:235666&r=eff |
| By: | Jimi, Nusrat A; Kumbhakar, Subal; Nikolov, Plamen V; Malek, Mohammad Abdul |
| Abstract: | Abstract: Poor financial environment of rural developing economy leads to underinvestment and inefficiency of marginal and small-scale farm households. Development interventions for providing improved market access and credit at subsidized interest rate to small farm households are therefore considered as the preconditions in the transformation process of rural agrarian economy. Hence, the question of whether access to resources influences farm households’ production decisions, performance and efficiency is very important. In this paper, we attempt to estimate the impact of a subsidized credit on farm output and efficiency of small and marginal rice farmers of Bangladesh. Using survey data of a field experimental study, we show that relaxing the credit constraint has significant positive impact on farm output and efficiency. On an average, small-scale rice farms with access to subsidized credit are found to be 13% more efficient than farms with no credit access. The increase is 76% on average when we use the randomized access to credit as instrument for farm credit. We also examine the impact heterogeneity of access to credit by rice variety. We find that cultivation of modern Hybrid rice variety is significantly higher (on average 17%) for treatment farm households compare to the control group. However, we do not find much evidence of heterogeneous productivity impact of access to credit by HYV vs. Hybrid rice. Combining the results, we conclude that access to credit is effective in improving the overall output and efficiency of marginal and small-scale rice farm households. Thus, policies enhancing the credit access of marginal farmers are important for sustainable agricultural development of rural developing economy. |
| Keywords: | Randomize Control Trial, Credit, Small Farm, Efficiency, Community/Rural/Urban Development, Production Economics, Productivity Analysis, O13, Q14, E51, |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:236230&r=eff |
| By: | HA Doan Thi Thanh (Asian Development Bank Institute); KIYOTA Kozo (Keio Economic Observatory, Keio University); YAMANOUCHI KentaAuthor-Workplace-Name: Keio University |
| Abstract: | This paper attempts to measure the effect of resource misallocation on aggregate manufacturing total factor productivity (TFP), focusing on Vietnamese manufacturing firms for the period 2000–2009. One of the major findings of this paper is that there would have been substantial improvement in aggregate TFP in Viet Nam in the absence of distortions. The results imply that potential productivity gains from removing distortions are large in Vietnamese manufacturing. We also find that smaller firms tend to face advantageous distortions, while larger firms tend to face disadvantageous ones. Moreover, the efficient size distribution is more dispersed than the actual size distribution. These results together suggest that Vietnamese policies may constrain the largest and most efficient producers and coddle its small and least efficient ones. |
| Keywords: | misallocation. total factor productivity, Viet Nam |
| JEL: | O47 F14 D2 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2016-19&r=eff |
| By: | Ma, Xingliang; Smale, Melinda; Spielman, David; Zambrano, Patricia; Nazli, Hina; Zaidi, Fatima |
| Abstract: | Bt cotton remains one of the most widely grown biotech crops among smallholder farmers in lower income countries, and numerous studies attest to its advantages. However, the effectiveness of Bt toxin, which depends on many technical constraints, is heterogeneous. In Pakistan, the diffusion of Bt cotton occurred despite a weak regulatory system and without seed quality control; whether or not many varieties sold as Bt are in fact Bt is also questionable. We utilize nationally representative sample data to test the effects of Bt cotton use on productivity. Unlike previous studies, we invoke several indicators of Bt identity: variety name, official approval status, farmer belief, laboratory tests of Bt presence in plant tissue, and biophysical assays measuring Bt effectiveness. Only farmer belief affects cotton productivity in the standard production model, which does not treat Bt appropriately as damage-abating. In the damage control framework, all Bt indicators reduce damage from pests. Biophysical indicators have the largest effect and official approval has the weakest. Findings have implications for impact measurement. For policymakers, they suggest the need, on ethical if not productivity grounds, to improve variety information and monitor variety integrity closer to point of sale. |
| Keywords: | Bt cotton, Pakistan, productivity, damage abatement, pesticides, Agricultural and Food Policy, Farm Management, International Development, Productivity Analysis, O33, Q12, Q16, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:235527&r=eff |
| By: | Massón-Guerra, José Luis; Ortín-Ángel, Pedro |
| Abstract: | Entrepreneurship capital has been considered in the literature to be a public good, so it will positively affect the total factor productivity of the firms in a certain region. There is evidence confirming a positive relationship between entrepreneurship capital measures and regional production. This paper argues that this evidence could also be explained by the presence of decreasing returns to scale in firms’ production technology. So previous evidence may be mixing both effects: returns to scale and public goods. This paper provides a simple methodological benchmark for distinguishing between and measuring both effects. The analysis conducted using a sample of 52 Spanish provinces for eleven years confirms the presence of decreasing returns to scale. In our data, previous interpretations of the evidence overestimate the effect of regional entrepreneurship capital as a public good on the economy. |
| Keywords: | Entrepreneurship Capital, Regional Productivity, Scale Economies. |
| JEL: | L26 O4 O40 R11 |
| Date: | 2016–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:71587&r=eff |
| By: | Lynes, Melissa; Brewer, Brady; Featherstone, Allen |
| Abstract: | Nonparametric DEA models were ran to estimate cost and production frontiers of 503 electric generation plans in 2012. Preliminary results show that the relaxation of the greenhouse gas emission constraint for the constrained electric generation plants would reduce the cost for all greenhouse gas emissions in the study. However, it was found that when the model accounts for these greenhouse gas emissions as a bad output, the electric generation plants that were constrained were more efficient by most of the efficiency measures. This shows that the inclusion of a pollutant, in this case the greenhouse gas emissions of an electric generation plant, are accounted for in the production process, the efficiency scores and the frontier curves of the plant are affected and must be accounted for. |
| Keywords: | production, electricity, greenhouse gas emissions, Environmental Economics and Policy, Production Economics, Q41, D24, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:235890&r=eff |
| By: | El-Baz, Osama |
| Abstract: | The Egyptian economy has witnessed deterioration in its main macroeconomic indicators over the period (2008-2014). The main purpose of the paper was to estimate Egypt's potential output and identify the factors that might be responsible for the divergence of actual and potential output from each other. We used the production function approach to derive estimates of potential output and output gap over the period (1990-2014). The results of the analysis revealed that capital stock was the dominant factor contributing to GDP growth in Egypt, while the share of both labor and total factor productivity in GDP growth rate has been fluctuating over time. Intellectual property protection, efficiency of legal framework in settling disputes, strength of investor protection, and other factors exhibited a strong positive relationship with output gap in Egypt over the period (2010-2014). |
| Keywords: | Potential Output, Output Gap, HP Filter, Production Function Approach |
| JEL: | C1 E6 E65 E66 |
| Date: | 2016–05–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:71652&r=eff |
| By: | Wang, Sun Ling; Huang, Jikun; Wang, Xiaobing; Tuan, Francis |
| Abstract: | In this study, we use a multilateral total factor productivity (TFP) panel data, spanning 1985-2011 period, to test the hypotheses of convergence to a single TFP level (σ convergence) or to a region-specific steady state TFP growth rate (β convergence) for China’s farm sector. Results show that there is no evidence of an overall σ convergence across all provinces. However, we find robust evidences of β convergence. Estimated rates of β convergence are conditional on how we capture the heterogeneity across regions. Overall, the rate of β convergence ranges from 0.016 to 0.028. Estimates also show that higher growth rate of education, R&D, capital/labor ratio, or intermediate goods/labor ratio can boost the rate of TFP growth. |
| Keywords: | Total Factor Productivity (TFP), σ convergence, β convergence, multilateral comparison, China agricultural sector., Agricultural and Food Policy, International Development, Production Economics, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies, O13, O47, Q16, |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:235709&r=eff |
| By: | McArthur, Travis |
| Keywords: | Land titling, efficiency, sorting, PROCEDE, Mexico, Agricultural and Food Policy, International Development, Land Economics/Use, Production Economics, Productivity Analysis, O13, Q15, |
| Date: | 2016–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:236133&r=eff |
| By: | Cozza, Claudio; Rabellotti, Roberta; Sanfilippo, Marco |
| Abstract: | Using a new firm-level database, EMENDATA, this paper investigates the effects on Chinese multinational enterprises of Outward FDI (OFDI) into advanced European countries. Propensity score matching is combined with a difference-in-difference estimator to reduce the problems of self-selection of treated firms in foreign markets and to eliminate time-invariant and unobservable differences between those firms and the controls. The results provide robust evidence in support of the view that China’s OFDI had so far a positive impact on domestic activities in enhancing firms’ productivity and scales of operation, as measured by assets, sales and employment. Distinguishing among such investments on the basis of entry mode shows that acquisitions facilitate early access to intangible assets but are detrimental to financial performance, whereas greenfield investments have a positive impact on the scale and productivity of Chinese investors. Publication keywords: outward FDI, reverse spillovers, performance, Chinese multinationals |
| JEL: | F45 |
| Date: | 2014–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:2014_024&r=eff |
| By: | Plastina, Alejandro; Lence, Sergio H. |
| Keywords: | cost function, generalized quadratic, Bayesian, agriculture, productivity, technical change, duality, Production Economics, Research and Development/Tech Change/Emerging Technologies, Research Methods/ Statistical Methods, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:236132&r=eff |
| By: | Hasan, Iftekhar; Horvath, Roman; Mares, Jan |
| Abstract: | We examine the effect of finance on long-term economic growth using Bayesian model averaging to address model uncertainty in cross-country growth regressions. The literature largely focuses on financial indicators that assess the financial depth of banks and stock markets. We examine these indicators jointly with newly developed indicators that assess the stability and efficiency of financial markets. Once we subject the finance-growth regressions to model uncertainty, our results suggest that commonly used indicators of financial development are not robustly related to long-term growth. However, the findings from our global sample indicate that one newly developed indicator – the efficiency of financial intermediaries – is robustly related to long-term growth. |
| Keywords: | finance, growth, Bayesian model averaging |
| JEL: | C11 G10 O40 |
| Date: | 2015–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofrdp:2015_017&r=eff |
| By: | Klepacka, Anna M.; Florkowski, Wojciech J.; Revoredo-Giha, Cesar |
| Abstract: | This study examines the performance of the forested land ownership by farmers in Poland this paper compares the efficiency of farms reporting a portion of their operated land as a forest with those that do not own any forested land. Using FADN data, the study focuses first on cost efficiency, which was estimated using the fixed effects stochastic cost frontier model (Kumbakhar and Knox Lovell, 2003). A generalized multiproduct translog cost function (Caves, Christensen, and Tretheway, 1980) was selected to represent the deterministic part of the cost function because it imposes fewer a-priori restrictions than other functional forms commonly used for the task. The efficiency scores (i.e., the fixed effects) were subject to further analysis, to establish the differences between farms with and without forest land (where forest land was measured as the proportion of the total farm area that was under forest land). The results strongly indicated, both in aggregate and considering estimates by farm type, that most of the farms with forest land were relatively less efficient than farms without them. Because the average farm size has been steadily increasing (although it remains relatively small) in response to a decreasing farm numbers in Poland, while the commercial agricultural production contracts in some peripheral areas without creating a shortage of food or agricultural commodities, there is an opportunity to reallocate land from its current uses to reforestation on farms already managing small groves. The speed of reallocating land will, however, depend greatly on ability of forested land to generate a stream of income. Given the FADN data, the transfer of all remaining agricultural land operated by farms with forested acreage to reforestation would add about 170 thousand hectares of privately owned forests in Poland. Additionally, the transition of farms owing woodlands may lead to their new role in the national environmental policy and efforts to cut the greenhouse gas emissions. |
| Keywords: | Cost efficiency, FADN data, forest ownership, renewable energy policy, reforestation, Farm Management, Land Economics/Use, Resource /Energy Economics and Policy, Q15, Q23, D24, Q59, |
| Date: | 2016–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:235740&r=eff |
| By: | Pierfederico Asdrubali; Simone Signore |
| Abstract: | This paper estimates the economic impact at final beneficiary level of the Multi-Annual Programme for enterprises and entrepreneurship EU SME Guarantee Facility in Central, Eastern and South-Eastern European (CESEE) Countries in the period 2005-2012. Data on SME beneficiaries has been collected from administrative records and enriched with information on firms’ financial accounts taken from the Orbis database. The paper combines propensity scores and difference-in-differences estimation in order to evaluate the effect of having received a MAP-guaranteed SME loan on firm performance (employment, production, profitability and factor productivity) against a control group of comparable firms. Our results offer several insights. We find that the EU SME Guarantee Facility in the CESEE region had, on average, a significant positive effect on firms’ employment: beneficiary firms were able to increase their workforce by 17.3%, compared to the control groups, within the first 5 years following the issuance of the guaranteed loan. Moreover, by the fifth year after the signature date, the turnover of MAP beneficiaries had increased by 19.6%, compared to non-beneficiary companies. However, MAP beneficiaries faced a temporary setback in productivity, with respect to their peers, an effect that could be due to allocative inefficiencies following the MAP-induced increase in their production factors. Such gap was, however, partially absorbed over the medium run. By breaking down our sample by country, signature year, size and age classes, we observe that micro and young SMEs have benefited the most from MAP-guaranteed loans in terms of economic additionality. Overall, our findings suggest that the EU SME Guarantee Facility has been successful in bringing significant positive effects on beneficiary firms in CESEE Countries. |
| JEL: | O52 F33 E50 E63 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:euf:dispap:002&r=eff |
| By: | Li, Defu; Bental, Benjamin; Huang, Jiuli |
| Abstract: | Improving the efficiency either in the process of factor accumulation or in the process of production of final output is often considered as a main driving force for the sustainable growth of modern economies. However, this article proves that for the most important input, physical capital, total efficiency, i.e. the total efficiency gained in the process of accumulation and in the production process, must be zero along a stationary growth path. |
| Keywords: | Neoclassical Growth Model; Uzawa’s Theorem; Improving Efficiency; Technical Change; Stationary Growth Path |
| JEL: | E13 O30 O41 |
| Date: | 2016–05–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:71516&r=eff |
| By: | Rosegrant, Mark; Magalhaes, Eduardo; Valmonte-Santos, Rowena Andrea; Mason-D'Croz, Daniel |
| Abstract: | In this paper, we assess the levels of infrastructure investment and rates for return on investments to reduce postharvest losses (PHL). Food security impacts and rates of return to reducing PHL are compared to rates of return to productivity-increasing research and development (R&D) investment. First we undertake of review of the literature on the magnitude of PHL. Next we undertake an econometric analysis of the impact of infrastructure investments on PHL using a panel data set. Third, we quantify the investments required for any given level of PHL reduction by combining marginal effect analysis based on the econometric estimation with data on unit costs for specific infrastructural variables. Fourth, we undertake a cost-benefit analysis of the required infrastructural investments to assess whether or not significant efforts in PHL reduction are economically feasible; and compare these to the rates of return to investments in R&D. These scenarios show that investment in infrastructure for PHL reduction contributes to lower food prices, higher food availability, and improved food security, and has positive economic rates of return. However, improvements in food security and marginal returns to investment in agricultural research are considerably higher for investment in agricultural research than for investment in PHL reduction. Reductions in PHL are not a low-cost alternative to productivity growth for achieving food security. Rather, reduction in PHL through improved infrastructure requires large public investments and is complementary to investments in long-term productivity growth to achieve food security. |
| Keywords: | Post-harvest losses, infrastructure investment, food security, agricultural productivity growth, Agricultural and Food Policy, Crop Production/Industries, Food Security and Poverty, Research and Development/Tech Change/Emerging Technologies, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:235879&r=eff |
| By: | Musumba, Mark; Zhang, Yuquan W. |
| Abstract: | Developing economies are affected by price and productivity changes and this was evident during the 2007-2008 world food crisis and the 2010-2011 food price surge. For this study, we use a heterogeneous-agent modelling approach to simulate production and consumption responses of a household producing bananas (matooke), beans and maize; three of the top five staple food crops by per capita calorie intake in Uganda. Preliminary results focusing on maize producing households indicate substitution of maize for other items when market prices increase. Please note that complete results are pending and this work will be updated. |
| Keywords: | farm heterogeneity, computable general equilibrium model, maize productivity, price, Food Consumption/Nutrition/Food Safety, International Development, Production Economics, C61, Q12, |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:236282&r=eff |
| By: | Sung, Jae-hoon; Miranowski, John A. |
| Abstract: | We investigate the effectiveness of soil testing and pest scouting by focusing on field-level chemical use for corn production. Based on the ARMS phase II and phase III data, we estimate equations for technology adoptions and chemical use. For estimation, we incorporate nonlinear endogenous switching regression to account for the nonnegative chemical use and endogeneity problems regarding adoptions of conservation practices. We find that: 1) adopting information technologies are positively correlated with farmers’ human capital, field characteristics, and corn prices. 2) the effects of information technologies on farmers’ nitrogen use depends on crop rotation. To be specific, farmers who adopt soil testing and crop rotation use nitrogen less than farmers who use crop rotation but do not adopt soil testing by about 8 lb/acre, but soil testing has insignificant effects on the rate of nitrogen application by farmers who grew corn continuously. 3) farmers’ management practices such as the use of manure and GM corns have significant effects on their nitrogen and herbicide use, but the directions and sizes of them depends on adoption of information technologies and previous field use. |
| Keywords: | Information technologies, chemical use, ARMS, Crop Production/Industries, Farm Management, Production Economics, Q15, Q16, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:235858&r=eff |
| By: | Tabuchi, Takatoshi; Thisse, Jacques François; Zhu, Xiwei |
| Abstract: | We study how technological progress in manufacturing and transportation to-gether with migration costs interact to shape the space-economy. Rising labor productivity in the manufacturing sector fosters the agglomeration of activities, whereas falling transport costs associated with technological and organizational in-novations fosters their dispersion. Since these two forces have been at work for a long time, the final outcome must depend on how drops in the costs of producing and trading goods interact with the various costs borne by migrants. Finally, when labor is heterogeneous, the most efficient workers of the less productive region are the first to move to the more productive region. |
| Keywords: | Economic geography, Labor productivity, Manufacturing industries, Transportation, New economic geography, Technological progress, Migration costs, Labor heterogeneity |
| JEL: | J61 R12 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper599&r=eff |
| By: | Gibson, John; Burton-McKenzie, Ethan-John |
| Keywords: | Academic salary, Citations, Journal rankings, Research quality, Productivity Analysis, Teaching/Communication/Extension/Profession, A14, J44, Q00, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:235483&r=eff |
| By: | Shilpi,Forhad J.; Emran,Shahe |
| Abstract: | This paper provides evidence on the impacts of agricultural productivity on employment growth and structural transformation of non-farm activities. To guide the empirical work, this paper develops a general equilibrium model that emphasizes distinctions among non-farm activities in terms of tradable-non-tradable and the formal-informal characteristics. The model shows that when a significant portion of village income is spent on town/urban goods, restricting empirical analysis to the village sample leads to underestimation of agriculture's role in employment growth and transformation of non-farm activities. Using rainfall as an instrument for agricultural productivity, empirical analysis finds a significant positive effect of agricultural productivity growth on growth of informal (small-scale) manufacturing and skilled services employment, mainly in education and health services. For formal employment, the effect of agricultural productivity growth on employment is found to be largest in the samples that include urban areas and rural towns compared with rural areas alone. Agricultural productivity growth is found to induce structural transformation within the services sector with employment in formal/skilled services growing at a faster pace than that of low skilled services. |
| Keywords: | Economic Theory&Research,Crops and Crop Management Systems,Labor Policies,Labor Markets,Rural Poverty Reduction |
| Date: | 2016–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7685&r=eff |