Evolving techniques in production function identification illustrated in the case of the US dairy

Heesun Jang and Xiaodong Du

Applied Economics, 2019, vol. 51, issue 14, 1463-1477

Abstract: We estimate production technologies of major dairy producing regions in the U.S. The simultaneity and sample selection biases are carefully corrected following the recent development in the literature. The commonly applied control function approaches are found to be misleading in correcting for biases of coefficient estimates on flexible and quasi-fixed input variables. We show that the emerging dairy regions have relatively higher aggregate productivity than traditional regions. Dynamic decomposition results indicate that surviving farms play a more important role in regional productivity growth than entering and exiting farms. Farm- and regional-level driving forces of farm productivity are also examined.

Date: 2019
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DOI: 10.1080/00036846.2018.1527457

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