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Capital Obsolescence and Agricultural Productivity

Author

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  • Elisa Keller

    (Durham University Business School)

  • Julieta Caunedo

    (Cornell University)

Abstract

Cross-country disparities in agricultural productivity are large and on average, larger than in other sectors of the economy. This paper studies the role of capital-embodied technology adoption in explaining these cross-country disparities. We construct a novel data set of second-hand prices of agricultural equipment (tractors) across countries. We then present a vintage capital model that links equipment prices to the quality and composition of the stock of capital. In particular, a) the path of the best available equipment quality in a country is linked to the evolution of the price of any piece of equipment through time; and b) the composition of the capital stock is linked to cross country dierences in the price level of a piece of equipment. Using the unique characteristics of our data set, we document that countries with higher agricultural labor productivity have steeper age-price proles for tractors with comparable characteristics. We find that quality disparities in the stock of capital explain 24% of the differences in agricultural productivity growth across countries. Moreover, one-third of the disparities in the level of productivity can be accounted for by disparities in capital embodied technology.

Suggested Citation

  • Elisa Keller & Julieta Caunedo, 2016. "Capital Obsolescence and Agricultural Productivity," 2016 Meeting Papers 686, Society for Economic Dynamics.
    • Handle: RePEc:red:sed016:686
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    References listed on IDEAS

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    Cited by:

    1. Blanco, Cesar & Raurich, Xavier, 2022. "Agricultural composition and labor productivity," Journal of Development Economics, Elsevier, vol. 158(C).
    2. Chen, Chaoran, 2020. "Technology adoption, capital deepening, and international productivity differences," Journal of Development Economics, Elsevier, vol. 143(C).
    3. Virgil Eldon Ball & Carlos San Juan Mesonada & Carlos Sunyer Manteiga & Kennet Ericson & Yu Sheng, 2023. "Technology catch‐up in agriculture among advanced economies," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(1), pages 18-37, January.
    4. Shuai Qin & Zheying Han & Hong Chen & Haokun Wang & Cheng Guo, 2022. "High-Quality Development of Chinese Agriculture under Factor Misallocation," IJERPH, MDPI, vol. 19(16), pages 1-20, August.
    5. Cesar Blanco & Xavier Raurich, 2018. "Agricultural Composition, Structural Change and Labor Productivity," 2018 Meeting Papers 772, Society for Economic Dynamics.
    6. Martina Kirchberger & Keelan Beirne, 2021. "Concrete Thinking About Development," Trinity Economics Papers tep0621, Trinity College Dublin, Department of Economics.

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