A Unique Agricultural Labour in Iran

Selected different production functions to describe the agricultural labour situation in Iran were estimated using 35 years of data. The Return To Scale (RTS), Pure Technical Change (PTC) and Non-Neutral Technical Change (NNTC) were calculated. The results suggest that the agricultural sector is facing a labour surplus problem. Additionally, capital and land are scare resources, and impose a gradual binding constraint on production in this sector. The RTS before the materialization of the Islamic Revolution was positive, while it has changed to negative after that event. The PTC has increased over time, while the NNTC has declined. The overall results suggest that policy makers should reduce the labour force in the agricultural sector, and improve the capital-intensive methods in order to simultaneously increase the output and productivity in this sector and in the rural areas.

Keywords:

Agricultural Labour , Production Functions , Technological Change , Return to Scale , Labour Surplus