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Wage Growth, Landholding and Mechanization in Agriculture Evidence from Indonesia

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  • Yamauchi, Futoshi

Abstract

This paper examines dynamic patterns of land use, capital investments and wages in agriculture using farm panel data from Indonesia. The empirical analysis shows that with an increase in real wages that prevailed in both agricultural and non-agricultural sectors in rural areas, relatively larger farmers increased the size of operational farm land by renting in land. An increase in real wages has induced the substitution of labor by machines among relatively large farmers. Machines and land are complementary and, consistently, the inverse land-productivity relationship is reversed among relatively large holders.

Suggested Citation

  • Yamauchi, Futoshi, 2015. "Wage Growth, Landholding and Mechanization in Agriculture Evidence from Indonesia," 2015 Conference, August 9-14, 2015, Milan, Italy 212723, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae15:212723
    DOI: 10.22004/ag.econ.212723
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    1. Dwayne Benjamin & Loren Brandt, 2002. "Property rights, labour markets, and efficiency in a transition economy: the case of rural China," Canadian Journal of Economics, Canadian Economics Association, vol. 35(4), pages 689-716, November.
    2. Keijiro Otsuka & Yanyan Liu & Futoshi Yamauchi, 2013. "Factor Endowments, Wage Growth, and Changing Food Self-Sufficiency: Evidence from Country-Level Panel Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(5), pages 1252-1258.
    3. Yamauchi, Futoshi, 2014. "Wage growth, landholding, and mechanization in agriculture : evidence from Indonesia," Policy Research Working Paper Series 6789, The World Bank.
    4. Keijiro Otsuka, 2013. "Food insecurity, income inequality, and the changing comparative advantage in world agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 44(s1), pages 7-18, November.
    5. Wang, Xiaobing & Yamauchi, Futoshi & Otsuka, Keijiro & Huang, Jikun, 2016. "Wage Growth, Landholding, and Mechanization in Chinese Agriculture," World Development, Elsevier, vol. 86(C), pages 30-45.
    6. Foster, Andrew D. & Rosenzweig, Mark R., 2010. "Is There Surplus Labor in Rural India?," Center Discussion Papers 95273, Yale University, Economic Growth Center.
    7. Yamauchi, Futoshi & Muto, Megumi & Chowdhury, Shyamal & Dewina, Reno & Sumaryanto, Sony, 2011. "Are Schooling and Roads Complementary? Evidence from Income Dynamics in Rural Indonesia," World Development, Elsevier, vol. 39(12), pages 2232-2244.
    8. Fumio Hayashi & Edward C. Prescott, 2008. "The Depressing Effect of Agricultural Institutions on the Prewar Japanese Economy," Journal of Political Economy, University of Chicago Press, vol. 116(4), pages 573-632, August.
    9. Futoshi Yamauchi, 2012. "Prenatal Seasonality, Child Growth, and Schooling Investments: Evidence from Rural Indonesia," Journal of Development Studies, Taylor & Francis Journals, vol. 48(9), pages 1323-1341, September.
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    Cited by:

    1. Wang, Xiaobing & Yamauchi, Futoshi & Otsuka, Keijiro & Huang, Jikun, 2016. "Wage Growth, Landholding, and Mechanization in Chinese Agriculture," World Development, Elsevier, vol. 86(C), pages 30-45.
    2. Keijiro Otsuka & Yanyan Liu & Futoshi Yamauchi, 2016. "The future of small farms in Asia," Development Policy Review, Overseas Development Institute, vol. 34(3), pages 441-461, May.
    3. Tran, Duc & Vu, Ha Thu & Goto, Daisaku, 2022. "Agricultural land consolidation, labor allocation and land productivity: A case study of plot exchange policy in Vietnam," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 455-473.
    4. Giller, Ken E. & Andersson, Jens & Delaune, Thomas & Silva, João Vasco & Descheemaeker, Katrien & van de Ven, Gerrie & Schut, Antonius G.T. & van Wijk, Mark & Hammond, Jim & Hochman, Zvi & Taulya, God, 2022. "IFAD Research Series 83: The future of farming: who will produce our food?," IFAD Research Series 322005, International Fund for Agricultural Development (IFAD).
    5. Moeis, Faizal Rahmanto & Dartanto, Teguh & Moeis, Jossy Prananta & Ikhsan, Mohamad, 2020. "A longitudinal study of agriculture households in Indonesia: The effect of land and labor mobility on welfare and poverty dynamics," World Development Perspectives, Elsevier, vol. 20(C).
    6. Martin, William J. & Fukase, Emiko, 2014. "Who Will Feed China in the 21st Century? Income," 2014: Food, Resources and Conflict, December 7-9, 2014. San Diego, California 197164, International Agricultural Trade Research Consortium.
    7. Ken E. Giller & Thomas Delaune & João Vasco Silva & Katrien Descheemaeker & Gerrie Ven & Antonius G.T. Schut & Mark Wijk & James Hammond & Zvi Hochman & Godfrey Taulya & Regis Chikowo & Sudha Narayana, 2021. "The future of farming: Who will produce our food?," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 13(5), pages 1073-1099, October.
    8. Yamauchi, Futoshi, 2014. "Wage growth, landholding, and mechanization in agriculture : evidence from Indonesia," Policy Research Working Paper Series 6789, The World Bank.

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    Keywords

    Agribusiness; Land Economics/Use; Research and Development/Tech Change/Emerging Technologies;
    All these keywords.

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