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Aggregate production function and technological change in Canadian agriculture, 1935-65. McPherson, Allister John

Abstract

A study was undertaken to investigate the macro production relationships in Canadian primary agriculture during the 1935-65 period. Specifically, the problem was to measure simultaneously the rate of disembodied technological change and technological change embodied in machinery and implements, and material inputs. To estimate technological change, regression estimates were obtained for a linear homogeneous Cobb-Douglas production function, where real gross agricultural output per person employed was the dependent variable, and a time index, weather index, and the annual flow of real capital services (including material inputs) per person employed were the independent variables. The data, which consisted of time series of thirty-one annual observations, was derived mainly from publications of the Dominion Bureau of Statistics. The rate of disembodied technological change was estimated directly by specifying a term which allowed for shifts in the production function over time. To measure the rate of embodied technological change, which was assumed to be capital-augmenting in the vintage sense, several alternative values for the improvement in the productive quality of machinery and implements, and material inputs were imposed on the original data series. Based on these alternatives, a matrix of regression results was obtained, and the true value of the rate of embodied technological change was inferred by choosing the "best" regression. In addition, several alternative models were investigated. When disembodied and embodied technological change were specified simultaneously, the "best" estimate of the annual rate of disembodied technological change was 1.76 per cent, while embodied technological change in material inputs was estimated at 3.5 to 4.0 per cent annually. There was no evidence of a positive rate of embodied technological change in machinery and implements in any of the regressions. However, it was concluded that this a priori unexpected result should be considered substantially biased.

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