Wage Growth, Landholding, and Mechanization in Agriculture : Evidence from Indonesia

This paper uses farm panel data from Indonesia to examine dynamic patterns of land use, capital investments, and wages in agriculture. The empirical analysis shows that an increase in real wages has induced the substitution of labor by machines among relatively large farmers. Large farmers tend to increase the scale of operation by renting in more land when real wages increase. Machines and land are complementary if the scale of operation is greater than a threshold size. In contrast, such a dynamic change was not observed among relatively small holders, which implies a divergence in the movement of the production frontier between Java and off-Java regions given that the majority of small farmers are concentrated in Java.

Bibliographic Details

Main Author:	Yamauchi, Futoshi
Language:	English en_US
Published:	World Bank, Washington, DC 2014-02
Subjects:	AGRARIAN STRUCTURE, AGRICULTURAL DEVELOPMENT, AGRICULTURAL ECONOMICS, AGRICULTURAL EMPLOYMENT, AGRICULTURAL LAND, AGRICULTURAL PRODUCTION, AGRICULTURAL SECTORS, AGRICULTURAL WAGE, AGRICULTURAL WAGES, AGRICULTURAL WORKERS, AGRICULTURE, ATTRITION, AVERAGE WAGES, CAPITAL INVESTMENTS, CLIMATIC ZONES, CROP, CROP INCOME, CROP YIELD, CULTIVATED LAND, CULTIVATION, DAILY WAGE, DEVELOPMENT ECONOMICS, ECONOMIC GROWTH, ECONOMICS, EMPLOYMENT OPPORTUNITIES, FAMILY LABOR, FARM, FARM EFFICIENCY, FARM LABOR, FARM LAND, FARM PRODUCTION, FARM PRODUCTIVITY, FARM SIZE, FARM WORK, FARMER, FARMERS, FARMS, FOOD INSECURITY, FOOD POLICY, FOOD PRICE, GRAIN, HOUSEHOLD HEAD, HOUSEHOLD INCOME, HUMAN CAPITAL, INCOME GROWTH, INCOME INEQUALITY, INCOMES, INNOVATIONS, INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE, LABOR COSTS, LABOR FORCE, LABOR MARKET, LABOR MARKETS, LABOR SHORTAGE, LABOR SUPPLY, LABORERS, LABOUR, LABOUR MARKETS, LAND ACQUISITION, LAND DISTRIBUTION, LAND REFORMS, LAND SIZE, LANDHOLDING SIZE, MAJORITY OF FARMERS, MULTIPLE EQUILIBRIA, OUTPUTS, POLITICAL ECONOMY, PRODUCTION ACTIVITIES, PRODUCTION COST, PRODUCTION FUNCTION, PRODUCTION METHODS, PROPERTY RIGHTS, REAL WAGES, RENTS, RICE PRODUCTION, RURAL AREAS, RURAL DEVELOPMENT, SAFETY, SCHOOLING, SMALL FARMERS, SMALL FARMS, SMALL-SCALE FARMING, SOIL QUALITY, VILLAGE LEVEL, WAGE EARNERS, WAGE GROWTH, WAGE INCREASES,
Online Access:	http://documents.worldbank.org/curated/en/2014/02/19154151/wage-growth-landholding-mechanization-agriculture-evidence-indonesia https://hdl.handle.net/10986/17324
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