Abstract
The objective of this study is to investigate the sources of the growth of labor productivity in agriculture during the 1958-85 period during which the Japanese economy experienced a rapid growth until the early 1970s and a low or stable growth after that. This investigation is carried out for the average farms in different size classes by using data taken basically from Noka Keizai Chosa Hokoku. The Stevenson-Greene type translog cost function was estimated and the estimates were used to decompose the growth rate of labor productivity into the total substitution effect and TFP effect. These two effects were further decomposed into a number of effects. The former was decomposed into the price effect, nonhomotheticity effect, and biased technological change effect. And the latter was decomposed into the economies-of-scale effect and technological progress effect. The major findings are (1) larger scale farms responded more elastically to price changes than smaller farms in order to substitute other inputs for labor; and (2) the economies-of-scale effect played an important role in increasing the growth rate of labor productivity in larger scale farms.
It is now essential to raise productivity in Japanese agriculture. A policy implication of this study in this context is that agricultural policies should be made in such a manner that large farms can exploit more efficiently economies of scale and can introduce with more positive attitudes innovations in agricultural management in order to raise labor productivity.
