Factor Market Efficiency for Agriculture
Economic efficiency is a simplifying idea in that concern with it implies asking only one question about a resource situation— whether there are ways to make a greater contribution to total output of the economy. Diversity and change unsimplify the task of evaluating factor-use for agriculture. Resource adjustments have seldom been made so rapidly as in U.S. agriculture since World War II. This article considers the usual marginal conditions for efficiency. Quantitative hunches will be given about extent to which the conditions are fulfilled. Lags in factor adjustment, accompanied by agricultural surplus tendencies and income differentials, appear to be in prospect for at least several more years. There is a need for dynamic criteria of efficiency as a guide to how fast to expect adjustment. To ask only to go toward fulfillment of static criteria is too weak. To ask for instantaneous adjustment is asking for too much. The nearly 50 percent decline in labor inputs in agriculture in the last fifteen years is evidence of substantial adjustment somewhere between the too-weak and too-strong rate.
Tolley, G. S.,
& Farmer, B. M.
(1964). Factor Market Efficiency for Agriculture. American Economic Review, 54 (3), 107-119.