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Mechanizing Agriculture

Author

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  • Kala, Namrata
  • Caunedo, Julieta

Abstract

Economic activity in developing countries is labor-intensive, low-scale, and family run, with substantial family managerial time spent supervising hired labor. We run a randomized control trial that subsidizes access to rental equipment markets to study the impact of the adoption of mechanized practices on labor, productivity, and managerial span of control. The intervention induces greater mechanization in the upstream production stage, with labor savings concentrated in downstream, non-mechanized stages. The reduction in worker supervision needs increases the managerial span of control and allows households to increase non-agriculture income. We use the experimental elasticities to estimate a structural model where heterogeneous farmers make labor supply decisions in the family enterprise and outside of it. The consumption-equivalent welfare from the intervention is about 5.5%, and increases to 12% when accounting for shifts in labor supply. The model provides structural estimates of the marginal return to capital at 17%, and the shadow value of family labor, 14.5% below their outside option. These estimates provide the first causal effects of mechanization.

Suggested Citation

  • Kala, Namrata & Caunedo, Julieta, 2021. "Mechanizing Agriculture," CEPR Discussion Papers 16369, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16369
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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

    Keywords

    Mechanization; Productivity; Contracting frictions;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D2 - Microeconomics - - Production and Organizations
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • 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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