Agricultural Economics Research, Vol. 26 PDF Download

Author: U. S. Economic Research Service
Publisher: Forgotten Books
ISBN: 9781391283524
Category : Business & Economics
Languages : en
Pages : 44

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Book Description
Excerpt from Agricultural Economics Research, Vol. 26: April 1974 Figure 3 represents the product market for aggregate farm output. If the firm's response to the increased wage rate is to reduce output, then the aggregate supply curve would shift to the left (so to si)' If the demand for aggregate output is inelastic, total gross income would increase as a result of the reduction in aggregate supply. To summarize, short-run static equilibrium analysis as depicted in figures 1 to 3 suggests that given an inelastic demand for both hired labor and aggregate output, higher wage rates for hired farm labor would reduce the quantity of hired labor employed and increase aggregate gross farm income. The short-run static analysis suggested by figures 1 to 3 overlooks several key factors. First, the reduction in output suggested by figure 2 is predicated on the assumption that total expenditures remain unchanged. Yet in a longer run context it is possible to increase total expenditures through increased levels of borrowing, which in turn can lead to a higher level of capital stocks. Second, the substitution of family labor for hired farm labor is ignored in figure 2. Third, Coffey 2, p. 1065) suggests that one of the dynamic impacts of higher wage rates may be to increase worker productivity. All three factors imply a greater level of output than suggested by short-run analysis. Therefore, in a dynamic context it is not necessarily true that increased wage rates will decrease total output. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.