An Econometric Analysis of the Relative Share of Labor, Demand and Cross Demand Elasticities, and Elasticities of Substitution for Inputs: A Case Study in the Chiang Mai Valley
Sriboonchitta, Songsak
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https://hdl.handle.net/2142/69855
Description
Title
An Econometric Analysis of the Relative Share of Labor, Demand and Cross Demand Elasticities, and Elasticities of Substitution for Inputs: A Case Study in the Chiang Mai Valley
Author(s)
Sriboonchitta, Songsak
Issue Date
1983
Department of Study
Agricultural Economics
Discipline
Agricultural Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Agricultural
Abstract
Utilizing the economic theory of duality between production and cost functions, a cost function approach is used to identify those factors which influence the relative share of labor for farmers in the Chiang Mai Valley, Thailand. Data from a World Bank survey of farmers in the Chiang Mai Valley are used. The data are separated into two samples, one for those farmers using animal power and one using tractor power. In addition, demand and cross demand elasticities and elasticities of substitution for inputs are estimated. The estimated model and parameters are used to consider ways of lessening the problem of unequal income distribution and rural unemployment.
Restricted ordinary least squares (OLS), restricted seemingly unrelated regression, and Stein estimators are employed for estimation of the equations of the relative shares of inputs. The restricted OLS estimates are selected on the basis of a squared error risk criterion, efficiency of estimates of the coefficients of important explanatory variables, elimination of the choice problem of which equation to omit from the system of equations associated with seemingly unrelated regression and because the differences between the Stein and the restricted OLS estimates are trivial.
The restricted OLS empirical results indicate: (a) the relative share of labor is positively associated to increases in the prices of seed, fertilizer and labor but negatively related to price of equipment, rental cost of animals, land rent, and output for the animal power farming technique. The results from the tractor power farming technique are in the same direction, for the corresponding explanatory variables, as those of the animal power farming technique except the output level and price of fertilizer; (b) all of the input demand elasticities are inelastic; (c) all of the elasticities of substitution between labor and other inputs for the animal power farming are substitute inputs. In the tractor power farming technique, labor and equipment, labor and seed, labor and land are substitute inputs while labor and tractor, labor and fertilizer are complementary inputs.
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