The objectives of this paper are two-folds; 1) estimate Allen partial elasticity of substitution(AES) between the factor-pairs land, labor and farm machinery in rice production. 2) to analyze the changes of factor combination when the effect of light...
The objectives of this paper are two-folds; 1) estimate Allen partial elasticity of substitution(AES) between the factor-pairs land, labor and farm machinery in rice production. 2) to analyze the changes of factor combination when the effect of lightening labor-intensity of machinery is considered.
In order to fulfill the objectives, the translog cost function was aplied to estimastion AES, the method of deriving labor-intensity index per hour was discussed, and then, the cross section data extracted from 80 leading rice farms were analyzed.
The results of this analysis are as follows;
1. In case that labor-intensity per hour is not considered, the AES of factor pairs labor-farm machinery is 0.3859, and that of farm machinery-land is 0.3240, while the AES between labor and land is 0.2334. All of AES are positive and smaller than unity. Therefore, these three facotrs are competive from each other, but substitution between factors are not easy.
2. However, when labor-intensity per hour is taken consideration, the AES between labor and farm machinery is 1.5079, while those of factor pairs land-farm machinery and labor-land are -1.0198 and 0.6226, respectively. This results indicate that subsititution farm machinery for labor become easier and the combination of land and farm machinery turns into complementary relationship in this case.
3. All of the own price elastically and cross elasticity of factor demand are relativelygreater in case labour-intensity is taken consideration than in case it is not. They are, however, smaller thn unity in absolute value. This results imply low level of factor mobility in rice production.
4. Comclusionally, farm machinery not only save farm labor in quantity but lighten the degree of labor strength in quality. Therefore, it is mor realistic to take into consideration the effect of lightening labor-intensity of farm machinery in estimating elasticity of factor substitution. However, the method of estimating labor-intensity in this analysis is very rough. Hence, it is necessary to dvelope the precise estimating method for labor-intensity.