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on Efficiency and Productivity |
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Issue of 2018‒11‒19
twenty-one papers chosen by |
| By: | Bahta, S.; Temoso, O.; Mekonnen, D.; Malope, P.; Staal, S. |
| Abstract: | The study examined the production technologies and productive performance of smallholder beef production systems to determine the levels of technical inefficiency in the agricultural districts of Botswana. The analysis draws on data from 26 districts of Botswana for the period of 2006-2014 to estimate latent class stochastic frontiers in which the technological class to which the agricultural district belongs is determined within the model. To enable efficiency comparisons between agricultural districts across these technological classes, a meta-frontier that encompasses all the class frontiers is estimated. Components of efficiency drivers are embedded in this estimation to explain agricultural districts technical inefficiency with respect to their respective class frontiers. Results show that beef production efficiency is positively associated with the rate of formal education and negatively related with an increase in proportion of exotic breeds, high mortality and low offtake rates, indicating the presence of considerable scope for animal husbandry improvement. The mean technical efficiency scores for beef production between 2006 and 2014 for agricultural districts in class one is 18 % whereas it is 13 % for agricultural districts in class two, implying high potential to improve beef production using the same level of agricultural inputs through efficiency-enhancing investments. Acknowledgement : |
| Keywords: | Research Methods/ Statistical Methods |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277207&r=eff |
| By: | Davide Fantino (Bank of Italy) |
| Abstract: | I estimate potential output growth using a production function approach applied to individual firm-level data for Italy. The dataset includes 360,000 non-financial corporations over the period 2004-15. I compare these estimates with those obtained from aggregate data, with a view to extracting additional information on the drivers of potential output in recent years. The approach based on individual firm-level data suggests a more sluggish potential growth before the crisis and a stronger recovery afterwards; the main reason is that estimates based on aggregate data are likely to suffer from aggregation biases and endogeneity problems. I find that the contributions of labour and capital to potential output growth decline over time and that unobserved firms’ productivity explains most of the recovery after 2009; turnover has a substantial negative impact during the crisis, but a positive one afterwards. All the main economic sectors are affected by the financial crisis; potential growth in manufacturing is less damaged during the crisis and recovers afterwards; the service sector is recovering slowly, while construction firms are still not recovering. |
| Keywords: | potential output, heterogeneity, aggregation bias |
| JEL: | D24 E23 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1194_18&r=eff |
| By: | Wongnaa, C.A.; Awunyo-Vitor, D.; Mensah, A. |
| Abstract: | The study analysed the factors influencing profit and its efficiency for smallholder maize farmers in Ghana. The data used was collected from 576 maize farmers in Ghana s four main agro ecological zones using structured questionnaire. Descriptive statistics and the stochastic frontier translog profit function were the methods of analysis employed. The results showed that generally, an increase in the prices of fertilizer, pesticide, herbicide, seed and labour decreased the profitability of maize production in Ghana. Also, an increase in farm size by Ghanaian maize farmers decreased their profit levels. Furthermore, the maize farmers were found to be seriously profit inefficient as the mean profit efficiency was 48.4%. Maize farmers in the transitional zone of the country were also found to be more efficient in their profit levels than those in other zones. Finally, male gender, formal education, extension contact, access to good roads and credit as well as uses of fertilizer, pesticides and improved seeds were found to be positively related to profit efficiency of the farmers. Recommendations aimed at improving profit efficiency of maize farmers are suggested. Acknowledgement : We are especially indebted to the staff of the Ministry of Food and Agriculture in the West Mamprusi, East Gonja, Nkoranza, Ejura Sekyedumase, Fanteakwa, Sekyere South, Gomoa and Ketu districts/municipalities of Ghana for the information they provided about the maize crop and also assisting in the data collection. We are also grateful to the respondent maize farmers in the aforementioned districts/municipalities without whose co-operation the study could not have taken place. |
| Keywords: | Crop Production/Industries |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277009&r=eff |
| By: | Makuya, V.; Ndyetabula, D.; Mpenda, Z. |
| Abstract: | ABSTRACT This study was designed to assess the cost efficiency of watermelon production in Rufiji and Mkuranga Districts. Specifically the study determined cost efficiency level of watermelon farms, determined variation in cost efficiency between farms of different size and capital and examined sources of cost inefficiency. Two stage random sampling was used in selecting 200 farmers from the two Districts who were used to collect information required in achieving the major objectives of the study. Cost efficiency (CE) for farms in Mkuranga ranges from 0.10 to 0.99 with the mean CE of 0.73. Results for Rufiji show that the CE for the farms ranges from 0.89 to 0.99 with the mean CE of 0.90. Findings also revealed that farms with small farm size and capital size had higher mean CE than farms with large size and capital size in the study area. As for the sources of cost inefficiency, education level, farm size, capital size and logistic services were found to have significant influence on cost inefficiency. Apparently, these results suggest that watermelon production is generally cost efficient and the efficiency is influenced by capital size and farm size in the selected areas of study. Recommended in this paper is the encouragement of farmers to consider size of capital and farms when producing watermelon to ensure maximized efficiency. Keywords: Watermelon, Smallholder Farmers, cost efficiency, Tanzania. Acknowledgement : This work was supported by the University of Dodoma under Higher education loans board (HELSB) of the government of Tanzania. The authors would like to thank the reviewers in advancefor their constructive comments on improving this paper. |
| Keywords: | Crop Production/Industries |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277128&r=eff |
| By: | Suranjan Priyanath, Hunuwala Malawarage; Premaratne, S.P.; Yoosuf, Amina; Maurice, D. |
| Abstract: | The study aimed to identify the determinants of the technical efficiency of Smallholder Tea Farmers (STFs) under UTZ certification system in Sri Lanka by employing stochastic production frontier using a sample survey of 75 STFs supported by the UTZ programme conducted between January and March in 2016. The results showed that a small number of STFs (11.8 percent) were over 90 percent efficient and the level of efficiency was found to be negatively related to coefficients of UTZ certified STFs and positively related to number of years with the same plants. The results further showed the labor and fertilizer were the significant factors that determine the tea production of STFs. |
| Keywords: | Smallholder Tea Farmers, Stochastic Production Frontier, Technical Efficiency, UTZ Certification. |
| JEL: | D6 M2 |
| Date: | 2018–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:89683&r=eff |
| By: | Førsund, Finn R. (Dept. of Economics, University of Oslo); Heshmati, Almas (Sogang University, Seoul); Wang, Ke (Center for Energy and Environmental Policy Research, Beijing Institute of Technology, Beijing) |
| Abstract: | A framework for applied production theory should focus on the crucial features of the industry to be studied. First of all, to be useful for a dynamic study, a distinction has to be made between the theoretical production possibilities before investment takes place and the actual empirical production possibilities in the short run after investment has taken place. Then there is the distinction between production possibilities at the micro level of a plant or even division within a plant, and the aggregate production possibilities for the industry as a whole. Entry and exit of plants, and embodied technological change at the micro or plant level drive the dynamics. South Korean thermal plants using bituminous coal are studied for the period 2001-2008. The requirement of plant level data has severely restricted the use of the approach. However, the paper shows that such production function concepts can be applied to coal-fired electricity generation aggregated to the Chinese province level and still get valuable structural information for policy analysis. Development in Total Variable Factor Productivity (TVFP) and bias of technical change are estimated and illuminated using figures for isoquant maps, capacity regions in input coefficient space and average- and marginal cost functions both for the plant level in South Korea and for the aggregated province level in China. |
| Keywords: | Thermal electricity generation; Short-run production function; Dynamic structural change; Total Variable Factor Productivity measure; Factor bias |
| JEL: | C43 C61 D24 |
| Date: | 2018–11–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2018_006&r=eff |
| By: | Gupta, Apoorva (University of Nottingham); Patnaik, Ila (National Institute of Public Finance and Policy); Shah, Ajay (National Institute of Public Finance and Policy) |
| Abstract: | The positive correlation between firm productivity and export status is well established. This correlation can arise from multiple alternative casual models. We investigate these relationships, harnessing the transition of several firms from serving the domestic market to exporting, in a dataset of Indian firms from 1989 to 2015. Each firm which made the transition is matched against a control which did not. The transitions take place across many years, thus permitting a matched event study in firm outcomes. We find there is self-selection of more productive firms into exporting. Firms that make the transition become bigger, but there is little evidence of learning by exporting, of improvements in productivity right after exporting commences. However, there is evidence of mprovement in productivity of export starters a couple of years before they begin to export. |
| JEL: | F43 L1 D24 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:npf:wpaper:18/243&r=eff |
| By: | Yao Amber Li (Institute of Emerging Market Studies, Hong Kong University of Science and Technology); Valérie Smeets (Aarhus University); Frédéric Warzynski (Aarhus University) |
| Abstract: | In this paper, we use a detailed production survey in the Chinese manufacturing industry to estimate both revenue and physical productivity and relate our measurements to firms' trade activity. We find that Chinese exporters for largely export oriented products like leather shoes or shirts appear to be less efficient than firms only involved on the domestic market based on the standard revenue productivity measure. However, we show strong positive export premium when we instead consider physical productivity. The simple and intuitive explanation of our results is that exporters charge on average lower prices. We focus more particularly on the role of processing trade and find that price differences are especially large for firms involved in this type of contractual arrangements. We suggest three reasons to explain this result. First, lower prices may simply be due to a mechanical effect as processing trade products are not subject to tariffs nor have to pay VAT. Second, some types of processing trade activities entail that the processing trade firm receives the inputs for free from the contracting firm, therefore artificially depressing the values of inputs or materials used for the firm's production. Third, lower prices may also be a consequence of transfer pricing, as multinationals involved in FDI in China may alter the price charged for inter-company transactions to shift funds within the organization. |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:hku:wpaper:201858&r=eff |
| By: | Robert Anderton; Barbara Jarmulska; Benedetta Di Lupidio |
| Abstract: | This paper empirically investigates the effects of product market regulation on business churning (i.e. entry and exit of firms) and their impacts on productivity, using annual data for the period 2000-2014 across individual EU countries and sectors. The paper hypothesises that product market reforms, which reduce entry barriers and increase the degree of competition, can allow new firms to enter the market and compete vis-à-vis incumbent firms. The higher competitive pressures can push competitive incumbent firms to innovate while other less productive and inefficient firms may exit. These possible mechanisms can result in improvements to the average industry-level productivity. By using business demography data (i.e, business churning) at the industry and firm size level, we perform a panel data analysis across European countries and sectors to evaluate the effect of product market regulation on firm churning and their impacts on productivity. In particular, we differentiate between micro (less than 10 employees) and other firms given the substantial degree of heterogeneity among these two size classes both in terms of business churning and productivity growth. The paper finds that reducing product market regulation increases business dynamism (i.e. increases the churn rate) by facilitating firms’ entry and exit which, in turn, boosts sectoral total factor productivity. |
| Keywords: | product market regulation; business churning; productivity; EU |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:not:notgep:18/12&r=eff |
| By: | Nezih Guner (CEMFI, Centro de Estudios Monetarios y Financieros); Andrii Parkhomenko (Universitat Autònoma de Barcelona & Barcelona GSE); Gustavo Ventura (Arizona State University) |
| Abstract: | We document that for a group of high-income countries (i) mean earnings of managers tend to grow faster than for non managers over the life cycle; (ii) the earnings growth of managers relative to non managers over the life cycle is positively correlated with output per worker. We interpret this evidence through the lens of an equilibrium life-cycle, span-of-control model where managers invest in their skills. We parameterize this model with U.S. observations on managerial earnings, the size-distribution of plants and macroeconomic aggregates. We then quantify the relative importance of exogenous productivity differences, and the size-dependent distortions emphasized in the misallocation literature. Our fi?ndings indicate that such distortions are critical to generate the observed differences in the growth of relative managerial earnings across countries. Thus, observations on the relative earnings growth of managers become natural targets to discipline the level of distortions. Distortions that halve the growth of relative managerial earnings (a move from the U.S. to Italy in our data), lead to a reduction in managerial quality of 27% and to a reduction in output of about 7% ? more than half of the observed gap between the U.S. and Italy. We ?find that cross-country variation in distortions accounts for about 42% of the cross-country variation in output per worker gap with the U.S. |
| Keywords: | Cross-country income differences, managers, distortions, management practices, size distribution, skill investment. |
| JEL: | E23 E24 J24 M11 O43 O47 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2017_1710&r=eff |
| By: | Loren Brandt; Gueorgui Kambourov; Kjetil Storesletten |
| Abstract: | The non-state manufacturing sector has been the engine of China's economic transformation. Up through the mid-1990s, the sector exhibited large regional differences; between 1995 and 2004 we observe rapid convergence in terms of productivity, wages, and new firm start-up rates. To analyze the drivers of this behavior, we construct a Hopenhayn (1992) model that incorporates location-specific capital wedges, output wedges, and a novel entry barrier. Using Chinese Industry Census data we estimate these wedges and examine their role in explaining differences in performance across prefectures and over time. Entry barriers turn out to be the salient factor explaining performance differences. We investigate the empirical covariates of these entry barriers and find that barriers are causally related to the size of the state sector. Thus, the downsizing of the state sector after 1997 may be important in explaining the regional convergence and manufacturing growth after 1995. |
| Keywords: | Chinese economic growth; SOEs; fi rm entry; entry barriers; capital wedges; output wedges; SOE reform |
| JEL: | O11 O14 O16 O40 O53 P25 R13 D22 D24 E24 |
| Date: | 2018–11–07 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-622&r=eff |
| By: | Barrett, C.; Abay, K.; Abate, G.; Bernard, T. |
| Abstract: | We show analytically and empirically that non-classical measurement errors in the two key variables in a hypothesized relationship can bias the estimated relationship between them in any direction. Furthermore, if the errors are correlated, correcting for either one alone can aggravate bias in the parameter estimate of interest relative to ignoring mismeasurement in both variables, a second best result with implications for a broad class of economic phenomena of policy interest. We illustrate these results empirically by demonstrating the implications of mismeasured agricultural output and plot size for the long-debated (inverse) relationship between size and productivity. Our data from Ethiopia show large discrepancies between farmer self-reported and directly measured values of crop output and plot size; these errors are strongly, positively correlated with one another. In these data, correlated non-classical measurement errors generate a strong but largely spurious estimated inverse size-productivity relationship. We demonstrate empirically our analytical result that correcting for just one measurement problem may aggravate the bias in the parameter estimate of interest. Acknowledgement : This paper benefited from comments by Marc Bellemare, Leah Bevis, Chris Boone, Brian Dillon, John Gibson, Kalle Hirvonen and seminar participants at the African Development Bank. Any remaining errors are the authors sole responsibility. |
| Keywords: | Research Methods/ Statistical Methods |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:276985&r=eff |
| By: | Yu, L.; Huang, W. |
| Abstract: | Although the role of farmer cooperatives as a social unit can have impact on their performance, empirical analysis on how societal output and social value relevant variables affect the cooperatives performance is sparse. The objective of this paper is to provide an economic framework and operational model for performance measurement of farmer cooperative associated with societal impact. A multi-output translog production function considering social output represented by the number of beneficiary farmers using data from surveys 164 cooperatives in Fujian province, China, is estimated. The average technical efficiency of cooperatives is estimated to be 0.747, implying that cooperatives can be increased by 25.30% without any additional resources given the current production input level. It is interesting to find that cooperatives efficiency scores and their rankings are significantly different with and without taking societal output into account, which indicates that social output created by the number of beneficial farmers cannot be ignored when evaluating cooperative s performance. The societal value relevant variables for technical inefficiency factors represented by extent of providing members service, namely training members and selling products are also found negatively affecting technical efficiency of cooperatives. The findings indicate the evaluation of cooperatives performance should consider their non-economic social contribution. Acknowledgement : The authors gratefully acknowledge financial support from Fujian Agriculture and Forestry University FAFU university: 2016 project (social science category) for supporting outstanding young scientific researchers: (NO: xjq201632).We also acknowledge the kind help from Professor Jerker Nilsson. |
| Keywords: | Agribusiness |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277512&r=eff |
| By: | Anthony Savagar |
| Abstract: | I develop a model of dynamic firm entry, oligopolistic competition and returns to scale in order to decompose TFP fluctuations into technical change, economic profit and markup fluctuations. I show that economic profits cause short-run upward bias in measured TFP, but this subsides to upward bias from endogenous markups as firm entry adjusts. I analyze dynamics analytically through a nonparametric DGE model that allows for a perfect competition equilibrium such that there are no biases in measured TFP. Given market power, simulations show that measured TFP is 40% higher than technology in the short-run, due solely to profits, and 20% higher in the long-run due solely to markups. During transition both effects contribute upward bias: initially the profit effect dominates, but by 5 quarters the two effects contribute equally, and by 10 quarters only the markup effect persists. The speed of firm adjustment ('business dynamism') will determine these timings and therefore the importance of each bias. |
| Keywords: | Endogenous Markups, Dynamic Firm Entry, Endogenous Productivity, Endogenous Entry Costs |
| JEL: | E32 D21 D43 L13 C62 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:ukc:ukcedp:1812&r=eff |
| By: | Santos, Eleonora; Khan, Shahed |
| Abstract: | Previous empirical evidence searching for externalities from Foreign Direct investment in Portugal showed mixed results. Using a new database containing 5,045 Portuguese manufacturing firms grouped by technological trajectories, we investigate the occurrence and magnitude of externalities from FDI in 1995-2007. We find both positive and negative externalities in scale-intensive and supplier-dominated industries. The magnitude of externalities is higher in the current period than in lagged periods. Because positive externalities outweigh the negative externalities, on the whole a 1% increase in foreign presence (measured by turnover) increases the Total Factor Productivity of domestic firms by 0.42 percentage points. Thus, the Investment Promoting Agency should capture foreign projects in those technological groups. |
| Keywords: | Technological Trajectories, Multinational Corporations, Productivity. |
| JEL: | F23 L60 O32 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:89620&r=eff |
| By: | Chen, H. |
| Abstract: | China is attempting to increase average farm size for relaxing laborers from land, however, the potential farm land size and productivity Inverse Relationship (IR) is triggering an intensive debate. As the China s agricultural insurance market has grown rapidly in recent years, the purpose of this study is to investigate whether the insurance can be a tool for mitigating the IR. We first model how risk causes IR. The finding brings an additional layer to the existing literature: a constant relative risk averse farmer still suffers from IR due to the Income Share Effect. When farm land size increases, the share of risky farm income rises, result in farmers to be more conservative, which causes efficiency loss. With insurance scheme, the lost productivity is recovered. A large-scale filed survey data is employed to test theoretical findings. Results show that, for farmers without insurance, the IR does exist. As land size increases 1 mu, the productivity significantly decreases 0.5 jin/mu, which is 4.5% decrease in total production if the government wants to increase average farm size from 10 mu to 100 mu. For the farmers with insurance purchase, the lost productivity is fully recovered as the theoretical model predicted and IR disappears. Acknowledgement : I am extremely grateful to my advisors Michael R. Carter and Stephen R. Boucher for invaluable discussions, guidance, and support. I also thank Danie A. Sumner, Jikun Huang, Wuyang Hu, Kevin Novan, Meilin Ma for helpful comments, as well as seminar participants.I would like to express special thanks to researchers at China Center for Agricultural Policy (CCAP) as well for their great efforts in conducting field surveys and collecting first-hand household data used in this study. |
| Keywords: | Labor and Human Capital |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277003&r=eff |
| By: | World Bank Group |
| Keywords: | Public Sector Development - Public Sector Management and Reform Education - Economics of Education Education - Education For All Education - Education Reform and Management Education - Educational Policy and Planning Education - Effective Schools and Teachers |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:29191&r=eff |
| By: | Garcia-Alvarez-Coque, J.-M.; Gharsi, O.; Martinez-Gomez, V.; Roig-Tierno, N. |
| Abstract: | Determinant factors of high performing agricultural regions. One indicator of agricultural performance is the agricultural labour productivity, as measured by the gross value added per annual working unit. Econometric approaches have been used to evaluate factors contributing to such productivity. However, these estimates require detailed data that often are not available at the regional level. We propose an alternative approach to disentangle the contribution of different drivers that lead to high productivity in EU regions, defined at NUTS 2 level. The fuzzy set Qualitative Comparative Analysis (fsQCA) provides a framework to identify combinations of attributes present in the most productive EU regions, by revealing pathways or sets of sufficient drivers present in such cases. We selected drivers based on previous research, and our findings show that there is not a unique pathway to reach high agricultural productivity. However, some drivers as strong farm structure and relevant public support appear in most of the pathways. Other dimensions related to research, development and innovation, and to natural conditions, seem also relevant. Acknowledgement : Dr. Garcia-Alvarez-Coque and Dr. Mart nez-G mez acknowledge support of the Project AGL2015-65897-C3-3-R funded by the Ministry of Economy and Competitiveness, for this research. Ms. Olfa Gharsi benefited from a scholarship from the Mediterranean Agronomic Institute of Zaragoza. |
| Keywords: | Productivity Analysis |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277456&r=eff |
| By: | Dhyne, Emmanuel; Konings, Jozef; Van den bosch, Jeroen; Vanormelingen, Stijn |
| Abstract: | Using a novel comprehensive data set of IT investment at the firm level, we find that a firm investing an additional euro in IT increases value added by 1 euro and 38 cents on average. This marginal product of IT investment increases with firm size and varies across sectors. IT explains about 10% of productivity dispersion across firms. While we find substantial returns of IT at the firm level, such returns are much lower at the aggregate level. This is due to underinvestment in IT (IT capital deepening is low) and misallocation of IT investments. |
| Keywords: | IT; Productivity Growth |
| JEL: | D24 L10 O14 O49 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13246&r=eff |
| By: | Abugamea, Gaber |
| Abstract: | The objective of this study is to examine the impact of bank-specific and major macroeconomic factors on the profitability of banking sector of Palestine by using the aggregate bank balance sheet data over the time period 1995-2015. This paper employs the Ordinary Least Square method to investigate the effect of bank’s asset size, capital, loans, deposits, economic growth and inflation on key bank profitability indicators, i.e., return on assets (ROA), return on equity (ROE) and net interest margin (NIM), separately. The main findings show that size has positive impact on ROE. Capital is positively related to ROA. Loans are positively correlated with both ROA and ROE. Deposits are negatively related to both ROA and ROE. Also, it is found that neither internal nor external factors have significant impact on NIM, despite the fact that overall internal and external factors have a significant effect as denoted by F-statistics value. Moreover, banking sector has not benefited significantly from both the inflationary environment and economic growth. These findings are of value to both academicians and policy makers. |
| Keywords: | Banking Sector, Banking Profitability, Internal & External Factors, OLS, Palestine |
| JEL: | G21 |
| Date: | 2018–05–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:89772&r=eff |
| By: | Trindade, F.; Fulginiti, L.; Perrin, R. |
| Abstract: | Considering different scenarios of future trends in climate, several authors have found that the impact that climate change will have on agriculture will most likely be negative. Most of these studies consider regions with low level of irrigation and do not control for purchased farm inputs. An important step towards understanding the evolution of agricultural production is to carefully estimate the effect that different temperatures and precipitation have on agricultural productivity considering also inputs under farmers control and the farmers profit-maximizing behavior. This research develops a county level biomass production function for an 800-mile climatic gradient from the Rocky Mountains to the Mississippi River (41N). Our results quantify the critical effects that high temperatures have on agricultural productivity in the region, after controlling for irrigation, other managed inputs, soil characteristics, precipitation, and technological change. We find a negative and increasing (nonlinear) effect of temperatures over 30 C on crop yields; a full day of temperatures between 30 C and 35 C decreases expected yield by 1.7% and a day of temperatures over 35 C decreases yields by 23.1%. In addition, converting rainfed crops to irrigated crop will produce a sharp decrease in the negative impact of the higher temperature interval. Acknowledgement : Support is acknowledged from the Agricultural Research Division s Strategic Investments: Enhancing Interdisciplinary Teams Program Forty-First Parallel Agro-Ecosystem Sustainability and Productivity, University of Nebraska, and from USDA, NIFA NEB-24-164 and NEB-24-172. |
| Keywords: | Environmental Economics and Policy |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277264&r=eff |