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Mechanizing Agriculture

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  • Julieta Caunedo
  • Namrata Kala

Abstract

What are the gains from mechanization? We run a randomized control trial that subsidizes access to equipment rental markets to study how the adoption of mechanization shifts farming households’ labor supply, farm productivity and labor demand. The intervention induces greater mechanization in the upstream production stage, with labor savings concentrated in downstream, non-mechanized stages. Savings on family labor are concentrated among members engaged in worker supervision and accompanied by an increase in households’ non-agricultural income. To assess the welfare implications of the intervention, we build a model of heterogeneous farmers that make joint labor supply and production decisions because incentives to mechanize depend on the opportunity cost of supervising hired labor. The calibrated model predicts a consumption-equivalent welfare improvement of 7.6%, with two-thirds of those gains accruing to leisure. Welfare gains are heterogeneous despite common treatment effects. Through counterfactuals, we show that endogenous productivity gains account for relatively more of the welfare gains for farmers with low-supervision ability.

Suggested Citation

  • Julieta Caunedo & Namrata Kala, 2021. "Mechanizing Agriculture," NBER Working Papers 29061, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29061
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    Cited by:

    1. Qinan Lu & Xiaodong Du & Huanguang Qiu, 2022. "Adoption patterns and productivity impacts of agricultural mechanization services," Agricultural Economics, International Association of Agricultural Economists, vol. 53(5), pages 826-845, September.
    2. Stemmler, Henry & Meemken, Eva-Marie, 2023. "Greenhouse farming and employment: Evidence from Ecuador," Food Policy, Elsevier, vol. 117(C).

    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D2 - Microeconomics - - Production and Organizations
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General

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