Semiparametric estimation of agricultural production function based on modeling productivity dynamics (case study: estimation of the tomato yield function in selected provices of Iran)
Subject Areas : Agricultural Economics ResearchMahdi Ghaemi Asl 1 , Mostafa Salimifar 2
1 - دانشجوي دکتري علوم اقتصادي، دانشکده علوم اداري و اقتصادي، دانشگاه فردوسي مشهد
2 - sاستاد گروه اقتصاد، دانشکده علوم اداري و اقتصادي، دانشگاه فردوسي مشهد
Keywords: Estimation of production function, Selection problem, Simultaneity problem, Semiparameteric method,
Abstract :
Selection problem and difficulties caused by unobserved shocks and simultaneity problem which is created by the relationship between productivity and inputs demand, when firms determine the optimum level of input, can have a significant effect on estimation of independent variables. Existence of these two problems in decision making of firms causes that the estimators such as least squares have biased estimation for elements of production function. In this article, in addition to introduction of the three-step semiparametric estimator of Olly and Pakes (1996) in order to control the biases of selection and simultaneity, we use this method to estimate of tomato production function based on information of fourteen provinces of Iran in period of 1379-1386. Result of production function estimation with semi-parametric method (unlike traditional methods), shows that the physical capital, labor, water, seed, poison and fertilizer have positive relationship with amount of production, and among all of inputs, the labor force, water, seed and poison are significant. Also results of models show that the estimated parameters of labor and capital are consistent with the implications of Olly and Pakes (1996) and show that labor estimated parameter in traditional methods (unlike semi-arametric method), has an upward bias and the coefficient associated with capital is downward biased. Therefore in estimation of production function and modeling of shocks, dynamics of productivity should be noticed in order to have unbiased result for estimation of factor shares. Also for the industrial of tomato production process and increment of use of agricultural machinery, it is necessary to take policy decitions and create tax incentives in order to reach the acceptable situation in tomato farms of Iran and Replacement of traditional farming with mechanized agriculture.
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