IDEAS home Printed from https://ideas.repec.org/p/eps/fmwppr/156.html
   My bibliography  Save this paper

The Theoretical Framework and Methodology to Estimate the Farm Labour and Other Factor-Derived Demand and Output Supply Systems

Author

Listed:
  • Tocco,Barbara
  • Bailey, Alastair
  • Davidova, Sophia

Abstract

This paper provides a conceptual framework for the estimation of the farm labour and other factorderived demand and output supply systems. In order to analyse the drivers of labour demand in agriculture and account for the impact of policies on those decisions, it is necessary to acknowledge the interaction between the different factor markets. For this purpose, we present a review of the theoretical background to primal and dual representations of production and some empirical literature that has made use of derived demand systems. The main focus of the empirical work is to study the effect of market distortions in one market, through inefficient pricing, on the demand for other inputs. Therefore, own-price and cross-price elasticities of demand become key variables in the analysis. The dual cost function is selected as the most appropriate approach, where input prices are assumed to be exogenous. A commonly employed specification – and one that is particularly convenient due to its flexible form – is the translog cost function. The analysis consists of estimating the system of costshare equations, in order to obtain the derived demand functions for inputs. Thus, the elasticities of factor substitution can be used to examine the complementarity/substitutability between inputs.

Suggested Citation

  • Tocco,Barbara & Bailey, Alastair & Davidova, Sophia, 2013. "The Theoretical Framework and Methodology to Estimate the Farm Labour and Other Factor-Derived Demand and Output Supply Systems," Factor Markets Working Papers 156, Centre for European Policy Studies.
  • Handle: RePEc:eps:fmwppr:156
    as

    Download full text from publisher

    File URL: http://www.factormarkets.eu/system/files/FM%20WP44%20Theoretical%20Framework%20to%20Estimate%20Farm%20Labour.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Wallace E. Huffman & Robert E. Evenson, 1989. "Supply and Demand Functions for Multiproduct U.S. Cash Grain Farms: Biases Caused by Research and Other Policies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(3), pages 761-773.
    2. Binswanger, Hans P, 1974. "The Measurement of Technical Change Biases with Many Factors of Production," American Economic Review, American Economic Association, vol. 64(6), pages 964-976, December.
    3. Christopher J. O'Donnell & C. Richard Shumway & V. Eldon Ball, 1999. "Input Demands and Inefficiency in U.S. Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 865-880.
    4. Griffin, Ronald C. & Montgomery, John M. & Rister, M. Edward, 1987. "Selecting Functional Form In Production Function Analysis," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 12(02), December.
    5. C. Richard Shumway & William P. Alexander, 1988. "Agricultural Product Supplies and Input Demands: Regional Comparisons," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(1), pages 153-161.
    6. Fuss, Melvyn & McFadden, Daniel & Mundlak, Yair, 1978. "A Survey of Functional Forms in the Economic Analysis of Production," Histoy of Economic Thought Chapters,in: Fuss, Melvyn & McFadden, Daniel (ed.), Production Economics: A Dual Approach to Theory and Applications, volume 1, chapter 4 McMaster University Archive for the History of Economic Thought.
    7. Vincent, David P., 1977. "Factor Substitution In Australian Agriculture," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(02), August.
    8. Ramon E. Lopez, 1984. "Estimating Substitution and Expansion Effects Using a Profit Function Framework," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(3), pages 358-367.
    9. David P. Vincent, 1977. "Factor Substitution In Australian Agriculture," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 21(2), pages 119-129, August.
    10. Ramon E. Lopez, 1980. "The Structure of Production and the Derived Demand for Inputs in Canadian Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(1), pages 38-45.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Macharia, John & Diiro, Gracious & Busienei, John R. & Munei, Kimpei & Affognon, Hippolyte & Ekesi, Sunday & Kassie, Menale & Muriithi, Beatrice & Nakimbugwe, Dorothy & Fiaboe, Komi, 2016. "Gendered analysis of the demand for poultry feed in Kenya," 2016 AAAE Fifth International Conference, September 23-26, 2016, Addis Ababa, Ethiopia 249279, African Association of Agricultural Economists (AAAE).

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eps:fmwppr:156. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Eleni Kaditi). General contact details of provider: http://edirc.repec.org/data/cepssbe.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.