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Identifying Factor Productivity from Micro-data: The case of EU agriculture

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  • Petrick, Martin
  • Kloss, Mathias

Abstract

The classical problem of agricultural productivity measurement has regained interest owing to recent price hikes in world food markets. At the same time, there is a new methodological debate on the appropriate identification strategies for addressing endogeneity and collinearity problems in production function estimation. We examine the plausibility of four established and innovative identification strategies for the case of agriculture and test a set of related estimators using farmlevel panel datasets from seven EU countries. The newly suggested control function and dynamic panel approaches provide attractive conceptual improvements over the received ‘within’ and duality models. Even so, empirical implementation of the conceptual sophistications built into these estimators does not always live up to expectations. This is particularly true for the dynamic panel estimator, which mostly failed to identify reasonable elasticities for the (quasi-) fixed factors. Less demanding proxy approaches represent an interesting alternative for agricultural applications. In our EU sample, we find very low shadow prices for labour, land and fixed capital across countries. The production elasticity of materials is high, so improving the availability of working capital is the most promising way to increase agricultural productivity.

Suggested Citation

  • Petrick, Martin & Kloss, Mathias, 2013. "Identifying Factor Productivity from Micro-data: The case of EU agriculture," Working papers 144004, Factor Markets, Centre for European Policy Studies.
  • Handle: RePEc:ags:famawp:144004
    DOI: 10.22004/ag.econ.144004
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    Cited by:

    1. Zeng, Shuwei & Gould, Brian & Thorne, Fiona & Laepple, Doris, "undated". "EU Milk Quota Elimination: Has the Productivity of Irish Dairy Farms Been Impacted?," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 261218, Agricultural and Applied Economics Association.
    2. Petrick, Martin & Kloss, Mathias, 2013. "Identifying Factor Productivity from Micro-data: The case of EU agriculture," Working papers 144004, Factor Markets, Centre for European Policy Studies.
    3. Pavel Ciaian & d'Artis Kancs & Maria Espinosa, 2018. "The Impact of the 2013 CAP Reform on the Decoupled Payments’ Capitalisation into Land Values," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(2), pages 306-337, June.
    4. repec:zbw:iamodp:274820 is not listed on IDEAS
    5. Kloss, Mathias & Petrick, Martin, 2014. "The productivity of family and hired labour in EU arable farming," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 183041, European Association of Agricultural Economists.
    6. Frick, Fabian & Sauer, Johannes, 2016. "Deregulation and Productivity – Empirical Evidence on Dairy Production," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236032, Agricultural and Applied Economics Association.
    7. repec:zbw:iamodp:271870 is not listed on IDEAS
    8. Mathias Kloss & Thomas Kirschstein & Steffen Liebscher & Martin Petrick, 2019. "Robust Productivity Analysis: An application to German FADN data," Papers 1902.00678, arXiv.org, revised Feb 2019.
    9. Petrick, Martin & Kloss, Mathias, 2018. "Identifying Agricultural Factor Productivity from Micro-data: A Review of Approaches with an Application to EU Countries," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 67(2), June.

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    More about this item

    Keywords

    Productivity Analysis;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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