The human capital effect on productivity and agricultural frontier expansion in Brazil

Agricultural production expansion is an important strategy to encourage structural changes and lead to economic development. However, the increase in the agricultural production can occur in two different ways: through productivity - intensive margin - and through area expansion - extensive margin. Human capital can enhance production both ways, but its effects remain little explored in the literature. This paper aims to investigate the effect of human capital on the increase in agricultural productivity and on the expansion of the agricultural frontiers in Brazil. The results indicate that human capital has a positive effect on these albeit with varying intensities and significant heterogeneities. Human capital affects agricultural productivity more in agricultural frontier regions where there is often a shortage of skilled labor. However, human capital does not affect the expansion of agricultural area in consolidated agricultural regions of the country.