Technical Change, Human Capital, and Spillovers in United States Agriculture, 1949-1985

Klaus W. Deininger

• Publisher: Routledge
• Year: 2019
• Topic: Biological Sciences
• eBook ISBN:
  9781000682267
• Subtopic: Ecology
• Index: Biological Sciences

First published in 1995. Based on a detailed adjustment for the quality of inputs and outputs, this study develops state-level measures for total factor productivity growth in US agriculture which are used to determine (i) the presence and determinants of convergence across states; (ii) the contribution of individual factors of production to productivity growth; (iii) the importance of spillovers across states; (iv) the economic effects of, returns to, and factor biases of research and extension. This title will be of great interest to students of economics and agriculture.

IV

THE ECONOMIC EFFECTS OF RESEARCH AND EXTENSION

In this section we report our results from using a cost function framework to estimate elasticities of factor substitution and own price elasticities; to determine the bias of technical change; to provide evidence regarding the factor-biasing effect of research, extension and spillins; and to evaluate the economic benefits from local and spillin research. Results indicate that estimated elasticities are broadly in line with other studies although there are some important differences; that productivity growth was not neutral but capital-using and land-saving; that public agricultural research tended to be biased in the same direction; and that there were significant economic benefits from research, many of which were associated with research spillins rather with public agricultural research undertaken by states themselves.

METHODOLOGY

CONVENTIONAL INPUTS

The cost of production for any state i can be written as a function of the quantity of output Q_i, the factor prices w_i for labor (L_i), land (A_i), purchased inputs (P_i), and capital (P_i) and the stock of knowledge K_i which in turn is a function of the state-specific real expenditures on research (R_i), extension, (E_i), as well as spillins (S_i). It follows that

$$C(\cdot )=C(Q_t,w_t,K_t)=C(Q_i,w_i,R_i,S_i,E_i)$$

We assume that factor prices, research, extension, and spillin-pools¹ are exogenous. If the same cost function holds for all 48 states, the data described above can be used to estimate this cost function using the state-specific price indexes constructed above. We control for the unobservable state-specific differences in infrastructure and intangible effects of the nonagricultural sector by including a set of 47 state-dummies. We choose a translog functional form that is specified as follows;

$$\begin{array}{l}\ln C\text{}(y_i,w_i,R_i,S_i,X_i)\text{}=\text{}{\displaystyle \sum _{i=1}^{47}{\delta }_i}{D}_i\text{}+\\ \text{}{a}_L\text{}(\ln \text{}{w}_{Li})\text{}+\text{}{a}_A(\ln \text{}{w}_{Ai})\text{}+\text{}{a}_P(\ln \text{}{w}_{Pi})\text{}+\text{}{a}_F(\ln \text{}{w}_{Fi})\text{}+\text{}\\ a_Y(\ln \text{}{Y}_i)\text{}+\text{}{a}_R(\ln \text{}{R}_i)\text{}+\text{}{a}_E(\ln \text{}{E}_i)\text{}+\text{}{a}_S(\ln \text{}{S}_i)\text{}+\text{}\\ b_{LL}(\ln \text{}{w}_{Li})\text{}(\ln \text{}{w}_{Li})\text{}+\text{}{b}_{LA}(\ln \text{}{w}_{Li})\text{}(\ln \text{}{w}_{Ai})\text{}+\text{}{b}_{LP}(\ln \text{}{w}_{Li})\text{}(\ln \text{}{w}_{Pi})\text{}+\text{}{b}_{LF}\text{}(\ln \text{}{w}_{Li})\text{}(\ln \text{}{w}_{Fi})\text{}+\\ \text{}{b}_{LY}(\ln \text{}{w}_{Li})\text{}(\ln \text{}{Y}_i)\text{}+\text{}{b}_{LR}(\ln \text{}{w}_{Li})\text{}(\ln \text{}R{}_i)\text{}+\text{}{b}_{LE}(\ln \text{}{w}_{Li})\text{}(\ln \text{}{E}_i)\text{}+\text{}{b}_{LS}\text{}(\ln \text{}{w}_{Li})\text{}(\ln \text{}{S}_i)\text{}\text{}+\text{}\\ b_{AA}(\ln \text{}{w}_{Ai})\text{}(\ln \text{}{w}_{Ai})\text{}+\text{}{b}_{AP}(\ln \text{}{w}_{Ai})\text{}(\ln \text{}{w}_{Pi})\text{}+\text{}{b}_{AF}(\ln \text{}{w}_{Ai})(\ln \text{}{w}_{Fi})\text{}+\text{}\\ b_{AY}(\ln \text{}{w}_{Ai})\text{}(\ln \text{}{Y}_i)\text{}+\text{}{b}_{AR}(\ln \text{}{w}_{Ai})\text{}(\ln \text{}{R}_i)\text{}+\text{}{b}_{AE}(\ln \text{}{w}_{Ai})\text{}(\ln \text{}{E}_i)\text{}+\text{}{b}_{AS}\text{}(\ln \text{}{w}_{Ai})\text{}(\ln \text{}{S}_i)\text{}+\text{}\\ b_{PP}(\ln \text{}{w}_{Pi})\text{}(\ln \text{}{w}_{Pi}\end{array}$$

Table of contents

• Cover
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• Table of Contents
• Tables
• Figures
• Appendix Tables
• Preface
• Original Half Title
• I. Introduction
• II. Agricultural Production, Research and Extension: A Quantitative Description
• III. Productivity Growth in US Agriculture
• IV. The Economic Effects of Research and Extension
• V. Conclusion
• Appendix
• References
• Index