Lang, Günter

Faktorproduktivität in der Landwirtschaft und EG-Agrarreform

Review of Economics, 44 (3): 382-365, (1993).

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Abstract: Discussions among politicians and farmers about a reform of the EC's Common Agricultural Policy ignored one important aspect: Is there an interdependence between outputlevels and factor productivity? The paper provides an empirical answer to this question by estimating a non-homothetic flexible functional form with four inputs (labour, capital, land, material) for the West-German agricultural sector. As a main result, the traditional measure of the Total Factor Productivity, the Solow-residual, overestimates the isolated technical progress by about 1% because of scale economies. If lower product prices and higher direct payments to the farmers lead to output reductions, this will also induce a less efficient production.

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