An Empirical Analysis of Labor Productivity Growth for the Taiwanese Rice Sector

Abstract

This paper investigates the factors responsible for a high growth rate of labor productivity of the agricultural sector for the period 1976-93 for Taiwan. This investigation is carried out by a newly devised procedure which decomposes the growth rate of labor productivity into (1) the total substitution effect which consists of the effects due to factor price changes and biased technological change and (2) the TFP effect composed of the effects due to scale economies and technological progress. Based on empirical estimation of the translog cost function, it was found that the total substitution effect contributed to the growth of labor productivity much more than the TFP effect did for the period under question.